Sugar is in the corner where the blows fall

According to the latest figures from Cosun, 99,3% of the area of ​​beets for this season has now been sown. The average sowing date will probably be a month earlier than we have been used to in the past two years. Drought is a bit of a problem, and not just to get the beets above ground. 415 hectares have been oversown, with drift damage as the main reason for oversowing in 76%, reports Cosun.

Monsoon
Drought is not a problem for India, the world's second-largest sugar producer. According to the Indian Meteorological Department (IMD), the country will receive above-average rain in the monsoon this year, it announced yesterday. The department estimates that 105% of the 70-year average will fall. The monsoon season runs from June to September and during these months about 3,5% of the rain needed for crops falls. Sufficient moisture during this period is usually good for the yields of crops such as sugarcane. "Above-average rainfall for the second year in a row will help New Delhi to increase exports of sugar, rice and onions," a Mumbai-based dealer for an international trading house told Reuters. Furthermore, various sources point to the positive effects of good harvests on inflation. If inflation remains below XNUMX%, the Indian central bank will also have some room to maneuver. That is not an unnecessary luxury in the current economic climate with a trade war.

The sugar market is also affected by this trade war. It is not even the trade restrictions that players in the market fear for the short term. The lower price for oil weighs more heavily. Both Brent and WTI oil lost around $10 per barrel this month and with cheaper oil it is less interesting for sugar cane processors to produce ethanol. Instead, more sugar cane is processed into sugar. That puts pressure on the sugar market.

Troubled by cheap oil
The preference for sugar production over ethanol is not yet fully reflected in the figures from Unica, the association of the sugar cane industry in Brazil. In the central southern part of Brazil (the world's largest sugar producer), the sugar cane harvest has started and the yields are good. In the second half of March, 201.000 tons of sugar cane were harvested. That is almost 10% more than last year at this time. Ethanol production increased by 3,5% to 547 million liters during this period. These are figures from before Trump's presentation on the import tariffs and the unrest that this caused.

On futures markets in both London and New York, sugar prices fell to their lowest level in months. New York even touched its lowest price level in 2,5 years during the day.