All going well, including for India, we don’t expect the coming year i.e. April 23 / March 24 S&D would produce more than 3 to 4 mln m/t surplus, all going well.
When we look at the world sugar trade the scenario is a little different. It seems the total amount of sugar that moved from A to B in 2022 may have reached 62 mln m/t (+4sh mln m/t) similar to 2020.
Total white sugar trade remains around 20 mln m/t and the growth (or drop) tends to be around raw sugars, with refineries importing for their domestic markets or re-export as refined sugars.
India exported 12.1 mln m/t in 2022, including 6.3 mln m/t of raw sugar (+3 mln m/t), but 2023 could be down to 6 mln m/t in total, as the Indian government allowed (Oct 22 / Sept 23) and so far, is refusing to allow any more.
With no expectations for more exports out of India and the uncertainty over the Indian 2023 crop, there is enough “stress” in the system.
The market is currently shaped for producers to maximize sugar i.e., higher sugar revenue than ethanol (Brazilian Millers) and export as soon as possible (market in backwardation).
The market is also shaped in a way that consumers will carry on buying the minimum waiting for better prices, but running the risk they end up paying more later on!
So, despite there being a sugar surplus unless the availability for exports is not higher (India), one can’t take for granted the flow from consumers and therefore availability on an ongoing basis.
In terms of pricing by producers, we estimated they may have done 85% of their intended exports for 2023 and less than 10% for 2024. When it comes to consumers we estimated they may have priced less than 50%. The important thing to take on board is the low level left of producer pricing for 2023.
When comes to “investors” placing “bets” around sugar prices, the latest CFTC report was on the 24th of January 2023. As we write this article we don’t have fresh numbers, but we expect they may have increased their NETT investments.
As of the 24th of January all “investors” had a nett long equivalent to 17 mln m/t in total with Index Funds accounting for about 8.8 mln m/t.
We may conclude that we do have a sugar surplus (more produced than consumed) for April/March 22/23 but we have production uncertainties for 23/24. We will also have a potential lower exportable surplus, for a while.
We also don’t have a natural pressure on pricing for 2023 (low level of pricing left for 2023), based on what could gather.
Alberto Peixoto E:
albertopeixoto@apcommodities.london T: +44(0) 7570 714 981
We may conclude that we do have a sugar surplus (more produced than consumed) for April/March 22/23 but we have production uncertainties for 23/24.
25 | ADMISI - The Ghost In The Machine | Q1 Edition 2023
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