One point to take into consideration is that Brazil may produce 112 mln m/t of Corn about 25 mln m/t higher than 21 and therefore Corn Ethanol production could rise toward 4 billion litters, about 1 billion litters higher than 21.
Thailand is also having a greater cane crop, estimated at 90/92 mln m/t higher than 67 mln m/t produced last year. Higher Cane is leading to higher sugar production. Estimated exportable sugars could be as high as 7,5 mln m/t about 2,5 mln m/t higher than previous year.
When we look at Europe Sugar production, it improved to around 17,6 mln m/t including the UK, but remains lower than consumption. Exports and Imports were also lower and the carry over less than 2 months of domestic demand. With spot prices in excess of 600 euros per m/t, one would expect a return to larger acreage. Well, that’s when the exceptions to the rule start.
The EU like the CIS, which grow Beet and have to rotate 25/30% of the land (planting something else than Beet) may find farmers “excited” to plant Wheat or Corn or some other form of Grain, giving the strong prices in the international market. The energy, transportation and fertilizer prices are much higher and herbicides/pesticides more prohibit in some Nations. The total EU and likely CIS Beet area may shrink rather than increase.
As we go forward, is likely we will have a bit more sugar, but due to more from cane rather than beet and depending on the weather for India, Thailand and Brazil but also the Brazil Sugar Mix (Crude -> Gasoline -> Real = Ethanol).
Sugar consumption may increase somewhat, despite higher inflation across the World (lower nett income), but will be production that may signal what prices may do. At this stage we see 2 to 4 mln m/t surplus for 22/23, all going well.
23 | ADMISI - The Ghost In The Machine | Q1 Edition 2022
THE ENERGY, TRANSPORTATION AND FERTILIZER PRICES ARE MUCH HIGHER AND HERBICIDES/ PESTICIDES MORE PROHIBIT IN SOME NATIONS. THE TOTAL EU AND LIKELY CIS BEET AREA MAY SHRINK RATHER THAN INCREASE.
So, based on the Sugar S&D and the fact producers are well priced for 2022, the pressure on prices is limited. What may send prices moving away from the current trading range 18/21 cts will be how “investors” see Sugar, in relation to the Energy sector (Crude/Corn/Cane/Beet) as well vs. other Agri Commodities.
We have seen Investors (Funds, Specs, Index) placing capital into sugar, but also taking out. Sometimes the “story” is better elsewhere, but overall, they are yet to go short and in the past few weeks they came back on the buying side.
As consumers are “chasing” the market, pricing/ buying in to weakness and Producers are relatively well priced for 2022, pressure on prices may only be stronger in case investors sell. May they decide to increase their longs, is likely that higher prices are possible. We assume the buying or selling decisions will depend on crop failures and Crude prices
Alberto Peixoto E:
albertopeixoto@apcommodities.london T: +44(0) 7570 714 981
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32
