CropGPT - Prices Up - Conflicting News in India

CropGPT - Sugar

Welcome to weekly summary of the global sugar market for March 18 2024. For more information on any aspect of this report, please visit the CropGPT website for far more detailed reporting and analysis.

In the latest trading developments, the global sugar market experienced a modest uptick as futures in both May New York and London markets concluded the week on a high note. The London market, in particular, marked a two-week peak, buoyed by several contributing factors.

A significant factor influencing the sugar market this week has been the notable upward movement in gasoline prices, reaching a 534-month apex. This surge in gasoline prices, amounting to approximately 20 cents per gallon, is poised to benefit the ethanol market. The rationale behind this is straightforward; higher gasoline prices enhance ethanol's economic appeal, pushing sugarcane mills to potentially allocate more cane for ethanol production rather than for sugar. This shift could inherently tighten sugar supplies, lending support to sugar prices.

Turning to the subcontinent, the Indian Sugar and Bioenergy Manufacturers Association has revised its sugarcane production forecast for the 2023/24 marketing year, initiating October 1, upwards by 2.9% to 34 million metric tonnes (MMT), from an earlier estimate of 33.05 MMT. This adjustment could spell an increase in refined sugar production in India, contingent upon the volume of cane channeled towards ethanol production.

Conversely, the Indian Sugar Mills Association (ISMA) presented a year-on-year contraction in sugar production for the period of October through February, reporting a 1.4% decline to 25.5 MMT for the 2023/24 season.

Shifting to Brazil, a pivotal player in the sugar market, there's a mixed signal emerging. Preliminary reports indicate that sugar output in Brazil has surged 26% year on year so far in the 2023/24 marketing year. Furthermore, industry forecasts from UNICA signal an increase in operational mills in the center-south region next month, with 28 mills poised to recommence production after the off-season hiatus, markedly up from 10 in the preceding year.

Brazil's central-south corridor, both sugarcane milling and ethanol production have witnessed substantial growth in 2024. The milling volume ascended to 647.15 million tonnes, marking a 19.12% upswing from the last crop year, while sugar production escalated by 25.66% to 42.18 million tonnes. This growth in production is mirrored by a robust increase in ethanol sales, particularly hydrated ethanol, which saw a 54.24% rise year to date.

In related developments, India has rolled out a national cooperative database aimed at bolstering its agricultural sector, including sugarcane production. Amid these innovations, Atul Ltd has debuted a new herbicide projected to enhance yields. Despite challenges such as drought conditions, Maharashtra’s sugar production has exceeded 9.9 million tonnes. The government has also introduced a bagasse-based cogeneration subsidy to encourage sustainable energy production, while continuing to regulate sugar exports to ensure domestic supply.

Adjustments in global policies and production estimates, such as Russia's temporary export embargo on sugar to safeguard domestic supplies following a 9.8% upturn in production, and adjustments in Polish import strategies to integrate Ukrainian sugar into the EU market, further complexify the global sugar landscape. These strategic and environmental shifts across significant sugar-producing nations underscore a dynamic and intricate global sugar market scenario as it adapts to evolving challenges and opportunities.

Remember, our CropGPT site contains far more details and reports about the sugar market, including crop health reports, 20 years of weather data, and even pricing data and earning call analysis. This podcast is just a few selected highlights for the week.