Global sugar surplus shrinks to 1.1 million tons after poor harvest

THE global sugar market is heading to a smaller supply surplus of 1.1 million tonnes in 2022/23 (Oct-Sept) from a March estimate of 2.5 million tonnes surplus, after poor harvest in areas such as India, Mexico and the European Union.

According to projections released on Tuesday (May 2) by broker and analyst StoneX in a presentation that is part of the New York Sugar Week, the situation is expected to improve only slightly in the new season (2023/24) to a global supply surplus of 1.3 million tonnes.

The broker’s sugar production projection for India, the world’s second largest producer, was cut to 32.8 million tonnes in the current season that ends in September from 34.1 million tonnes seen in March.

India’s new crop (2023/24) was seen basically stable at 32.5 million tonnes. StoneX does not see a recovery in India next season because planted area is expected to fall 4 per cent and the country is seen increasing the diversion of sugarcane from sugar to ethanol production.

The weather phenomenon El Nino, that brings global changes to rain patterns, would also be closely monitored, it said, since it could reduce soil moisture in Asia.

StoneX head of sugar analysis, Bruno Lima, said that El Nino, however, is not likely to impact Brazil production.

According to historical data, he said, the last two strong El Ninos in 2009 and 2016 actually allowed for increased sugarcane crush in Brazil’s centre-south (CS).

The brokerage increased its view for Brazil’s CS sugar production to 37.2 million tonnes (from 36.8 million tonnes).

But it said logistics could be a problem. There are worries if Brazilian ports will be able to handle record or near record crops of soybeans, corn and sugar.

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Lima said an additional problem was the delay in soy sales by farmers, which will push the peak of export season of beans into the peak of the sugar export flow around June and July. REUTERS