The expectations for the Brazilian sugar yield are positive. This is one of the reasons why the sugar price has fallen back to the level of the beginning of this month. But there are more bearish factors in the market.
The United States Department of Agriculture expected that Brazil will crush approximately 2022 million tons of sugar cane into sugar in the 2023/613 season. That is an increase of 6% compared to one marketing year earlier. This results in a sugar production of 36,3 million tons for the South American country, an increase of 3% compared to the previous season. Better weather conditions compared to the previous season should support this increase in production. An export of 25,5 million tons of sugar cane is expected.
Good yields are not only expected in Brazil, but also in... South Africa is that the case? In that country, a sugar yield of approximately 2,2 million tons is expected. An increase of 13% compared to the previous season. Exports from that country are expected to amount to 700.000 tons (+18%). Much of South Africa's sugar is exported to South Korea (28%), Malaysia (15%) and Indonesia (9%). High sugar prices have stimulated sugar cane production in this country, insiders report.
Almost 90% sown
In our own country, almost 90% of the national area of sugar beet has been sown, according to the most recent figures from Royal Cosun. The remaining area is expected to be sown by the end of this week. "Provided that manure can be supplied on time," writes the sugar beet organization. In addition, Cosun reports that more than 20 hectares have been oversown up to April 500, partly due to frost damage, hail damage and crust formation. A smaller sugar beet area is expected throughout the European Union, causing the sugar yield to drop to 2022 million tons in the 2023/16,3 season. This is a decrease of 250.000 tons compared to the 2021/2022 season.
Furthermore, Kenyan sugar production is expected to decline by 4% to 660.000 tons. This is due to lower yields due to reduced availability and application of fertilizer. According to the ministry, this is also a major challenge for the future. "If the war continues for a long time, the supply of fertilizer could become a problem for yields in the coming years," the USDA said. However, it does not foresee any problems for the coming harvest due to the war in Ukraine. The latter country, according to sources, currently has 155.600 hectares sown with sugar beets.
Price down sharply
The positive reports from Brazil and South Africa drown out the more negative reports from the European Union. This in combination with a lower oil price ($101 per barrel on Tuesday, April 26) and weak Brazilian real means that the price for sugar on the Intercontinental Exchange is rapidly declining. The quotation for sugar on the Intercontinental Exchange (ICE) has fallen to €490 per tonne. That is considerably less than about one week earlier, when the quotation was still €523 per tonne.