India made a big splash on May 24 with announcing an export ban on sugar. That could add a new dimension to the sugar price, which is currently on its way up again. It also became clear that the sugar beets in Europe are above average so soon after sowing.
India's government limits sugar exports to 10 million tons for the first time in six years. There is uncertainty in the domestic market at the second largest sugar exporter. The export restrictions should prevent a rise in domestic prices after it became known that Indian factories had already sold a record volume of sugar on the world market. The announcement of the restriction on sugar exports has not yet been reflected in the sugar price.
Sugar beets off to a good start
The monthly crop monitoring of the Mars bulletin shows that the sugar beets have come through well in the first weeks after sowing. It is still very early in the season, but according to the yield forecast, which is based on comparisons with crop status from previous years and the climate, sugar beet in Europe will be up by up to 5,4% compared to the last five years. In Western Europe in particular, sugar beets are above average.
Initially, the cold slowed the germination and early development of sugar beets in Central and Western Europe. Despite low temperatures, frost did not occur for the most part and damage to the seedlings was minimal. With the exception of France, where about 10% of the acreage had to be re-sown due to frost. The higher temperatures from the end of April meant that the young shoots could develop at a rapid pace, so that the fledgling crop is now in good shape for the time of year. The difference in precipitation did cause regional differences and the sowing campaign was completed within the normal time throughout Europe.
Brazil cuts sugar export contracts
Due to the high energy prices, the sugar cane factories choose to increase the production of ethanol. This is at the expense of sugar production and puts the high sugar price in a firmer saddle. Companies involved in the sugar trade in Brazil have seen many cancellations, Reuters reports. Factories are generally very flexible between the production of ethanol and sugar. Also of influence is the current sugar harvest in central Brazil. Sugar production in this area is 30% behind according to figures from S&P Global Commodity Insights.
Sugar listing on its way to a new ceiling
As in previous weeks, the sugar quotation on the Intercontinental Exchange (ICE) still follows the quotation of crude oil. For the month of May, ICE records an increase of 4,2%. The price of crude oil is still very high and increased slightly again last week. However, the sugar quote shot a lot higher at the beginning of May, trading at $23 per tonne of sugar on May 552,00. That is not far from the record in April when $576,20 per tonne was paid. With crude oil still firmly in the saddle and reporting around India, the sugar quote remains on track to hit the April ceiling.