October NY world sugar #11 (SBV24) Monday closed up +0.17 (+0.89%), and December London ICE white sugar #5 (SWZ24) closed down -4.90 (-0.93%).

Sugar prices Monday settled mixed, with NY sugar posting a 1-week high.  Sugar prices found support Monday from a +2% rally in crude oil prices (CLV24) to a 1-week high.  Last Tuesday, sugar prices fell to a 3-week low after crude oil plunged to a 16-month low.  Weaker crude oil prices undercut ethanol prices and may prompt the world's sugar mills to divert more cane crushing to sugar production rather than ethanol, thus boosting sugar supplies.

Strength in the Brazilian real (^USDBRL) also supported sugar prices after the real Monday rallied to a 2-1/2 week high against the dollar.  The stronger real discourages export selling from Brazil's sugar producers.

London sugar Monday was under pressure on signs of weak demand.  Estimates are that 544,600 MT of sugar was delivered to settle against the Oct 2024 London white sugar contract that expired last Friday, well above the 123,000 MT of sugar used to settle against the Oct 2023 London sugar contract, a sign of weak demand.

Sugar has carryover support from last Thursday when Unica reported that Center-South sugar production in the second half of August fell -6.0% y/y to 3.258 MMT.  Although, for the 2024/25 season through August, sugar production is up +3.9% y/y to 27.169 MMT.

Sugar prices have been under recent pressure on optimism that above-average monsoon rains in India will lead to a bumper sugar crop.  The Indian Meteorological Department reported Monday that India received 862.3 mm of rain during the current monsoon season as of September 16, or 8% more than the comparable long-term average of 801.5 mm.  India's monsoon season runs from June through September.

Late last month, sugar prices rallied to 2-1/4 month highs as drought and excessive heat caused massive fires in Brazil that have damaged sugar crops in Brazil's top sugar-producing state of Sao Paulo.  Sugar cane industry group Orplana said that as many as 2,000 fire outbreaks affected up to 80,000 hectares of planted sugarcane in Sao Paulo.  Green Pool Commodity Specialists said that as much as 5 MMT of sugar cane may have been lost due to the fires.   Also, Czarnikow cut its Brazil Center-South 2024/25 sugar production estimate to 39.2 MMT from 40.0 MMT last Tuesday due to drought and fire damage.  In addition, Covrig Analytics raised its 2024/25 global sugar deficit estimate last Tuesday to -600,000 MT from a previous estimate of -300,000 MT.

In a supportive factor for sugar prices, the International Sugar Organization (ISO) on August 30 forecasted a 2024/25 global sugar deficit of -3.58 MMT, much larger than the estimated -200,000 MT deficit for 2023/24.  ISO forecasted 2024/25 global sugar production of 179.3 MMT, down -1.1% y/y from 181.3 MMT in 2023/24.    

Meanwhile, Conab, Brazil's government crop forecasting agency, cut its 2024/25 Brazil Center South sugar production estimate on August 22 to 42 MMT from a previous forecast of 42.7 MMT, citing lower sugarcane yields due to drought and excessive heat.

In another supportive factor for sugar prices, India's Food Ministry on August 30 lifted restrictions on sugar mills producing ethanol for the 2024/25 year that starts November, which may prolong India's sugar export curbs.  Last December, India ordered sugar mills to stop using sugarcane to produce ethanol for the 2023/24 supply year to boost its sugar reserves.  India has restricted sugar exports since October 2023 to maintain adequate domestic supplies.  India allowed mills to export only 6.1 MMT of sugar during the 2022/23 season to September 30 after allowing exports of a record 11.1 MMT in the previous season.  

The Indian Sugar and Bio-energy Manufacturers Association (ISM) on July 3 reported India's 2023/24 sugar reserves at 9.1 MMT and reported a surplus of 3.6 MMT.   Separately, the ISM reported on May 13 that India's 2023/24 sugar production from Oct-Apr fell -1.6% y/y to 31.4 MMT.  Also, the ISM on July 30 projected India's 2024/25 sugar production would fall by -2% y/y to 33.31 MMT.  

Record heat in Thailand that may damage the country's sugarcane crops is bullish for sugar prices.  On May 6, Thailand's Meteorological Department said that more than three dozen of Thailand's 77 provinces posted record-high temperatures in April, with new highs beating records as far back as 1958.  Sugar millers in Thailand are reporting the lowest yield from crushed cane this year in at least 13 years.  However, Thailand's government on April 22 estimated that Thailand's 2023/24 sugar production from Dec-Apr 17 was 8.77 MMT, above a Feb estimate from the Thai Sugar Millers Corp for sugar production of 7.5 MMT.  Thailand is the world's third-largest sugar producer and the second-largest sugar exporter.

The USDA, in its bi-annual report released on May 23, projected that global 2024/25 sugar production would climb +1.4% y/y to a record 186.024 MMT and that global 2024/25 human sugar consumption would increase +0.8% y/y to a record 178.788 MMT.  The USDA forecasted that 2024/25 global sugar ending stocks would fall -4.7% y/y to a 13-year low of 38.339 MMT.  
 

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