Sugar Market Heads For Big Surplus, Bearish Price Outlook Sees -StoneX

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Band Marcelo Teixeira

NEW YORK, May 10 (Reuters)The world sugar market will see a relatively large surplus of 4.1 million tonnes new season departure in October at 5% production grow in Asia will more than offset an uptick in demand seen at 1.1%, broker and analyst StoneX said on Tuesday.

JGreater Asian production, along with expectations of a better crop in Brazil, will likely drive prices down towards the end of 2022 and the first quarter of 2023, StoneX said in a New York presentation hosting a series this week. seminars and social interactions between sugar market players.

“We understand there is a bear behind the barn,” said Rodrigo Martini, sugar and ethanol analyst for StoneX, referring to the medium-term outlook where price support is only seen by a possible higher ethanol demand in Brazil, which would lead to lower sugar. exit there.

Favorable weather conditions are driving production growth in Asia, he said.

India is set to have an even better crop in 2022/23 after its massive production the previous season, which StoneX has revised up to 35.5m tonnes. The country is expected to produce 36.5 million tons in the new season.

The broker expects Thailand to increase production from 10.1 million tonnes in 2021/22 to 11.5 million tonnes in the new season.

China is expected to increase production by 400,000 tons to 10.3 million tons, and will matter less due to lockdowns. StoneX sees Chinese imports at just 4.5 million tonnes in 2022/23, down 1 million tonnes from 2021/22.

Higher Asian production will offset a slight downward adjustment in sugar production in Brazil, the biggest producer, where StoneX expects factories to divert slightly more cane to ethanol.

The broker has reduced its projection of allocation of cane to sugar production from 45.5% in March to 44.8% now. With that, he sees Brazil’s South-Central region producing 33.9 million tonnes against a previous forecast of 34.5 million tonnes. But it is still higher than last year.

Ethanol currently gives better financial returns to factories in Brazil than sugar as energy prices have risen.

(Reporting by Marcelo Teixeira; Editing by Rashmi Aich and Mark Porter)

(([email protected]; +1 332 220 8062; Reuters messaging: [email protected]https://twitter.com/tx_marcelo))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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