Sugar futures at the Intercontinental Exchange are down more than 4% from the beginning of October, as the increased production has weighed on sentiment.
Sugarcane crushing in Brazil’s Centre-South Region during the first half October increased sharply, causing the prices to fall more than 2%.
Sugar futures, however, have recovered some of their losses from Tuesday, and are now trading 0.9% higher. This is in line with the higher crude oil price.
The most active sugar contract at the Intercontinental Exchange is 22.13 US Cents per pound.
Petrol prices increase when crude oil costs rise. It encourages drivers switch to ethanol. This means that more biofuel is diverted away from sugar.
The weaker dollar also helped to lower sugar prices on Tuesday, as a stronger dollar makes the commodity costlier for overseas buyers.
UNICA reports increased cane crushers in Brazil
UNICA, Brazilian Sugarcane and Bioenergy Industry Association (UNICA), reported on Friday that the cane crushing rate in the Centre-South region of the country was 33.8 millions tons during the first half-month of October.
According to the report, the amount of sugarcane crushed during the same time period last year was approximately 32.9 million tonnes.
Sugarcane crushing for the season as of mid-October was up 2.4% on the previous year to 538.8 millions tons.
According to the report, the sugar production in the first half October increased by 8 percent on an annual basis, to 2.4 millions tons.
As of mid-October, the cumulative sugar production for the season was 35.6 millions tons. This is an increase of nearly 2% compared to the same period last year.
The bumper crop in India is a further cause for concern
Prices have been impacted by the expectation of a bumper crop in 2024-25 season (October to September).
India’s giant is optimistic that a monsoon above normal during the months of June to September will increase production. India is the world’s second largest producer of sugar, after Brazil.
India Meteorological Department reported that the country had received 934.8 mm of rain during the monsoon that ended on September 30. This is 7.6% more than the average rainfall over a long period.
Weather agency said India also received the highest rainfall this monsoon in the last four years.
India’s Food minister Pralhad Joshi said recently that the government was considering lifting the export ban. He stated that the government would make a decision once it had the estimates of sugarcane production for 2024-25 and the opening balance in sugar.
In October 2023, India restricted sugar exports indefinitely to ensure adequate supply on local markets.
In the coming months, more sugar from India may increase global market supply and put further pressure on price.
Thailand’s increased sugar production
In addition, the higher production in Thailand, one of top-producing sugar countries, also affected sentiment.
Barchart.com reported that Thailand’s Office of the Cane and Sugar Board predicted last week that Thailand’s sugar production in 2024-25 would increase by 18% year-over-year to 10,35 million tons.
In the season 2023-24 that ended in April, Thailand produced 8,77 million tons. Thailand is the second largest sugar exporter worldwide.
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