Sugar quotations have hardly changed compared to recent weeks, although the trend in the market is still downwards. The latest production figures for Brazil are somewhat lower, but total global production remains significantly higher than last year. Indian rainfall has a positive effect on the market, putting pressure on prices. On the other hand, market agency Czarnikow slightly lowers expectations about world production.
Sugar prices remain under some pressure due to positive reports about sugar cane cultivation in the major producing countries. The American quotation closed yesterday at $397,27 per tonne, and that of London at $513,70 per tonne. Sugar prices have been showing a downward trend for months, although the downward steps have been quite limited recently.
Brazil, one of the world's largest sugar products, production figures in the second half of July were slightly lower than the same period a year earlier, reports the Brazilian sugar association Unica. At 3,6 million tonnes, production in the main production regions in the second half of July was 2,2% lower than last year. For the time being, Brazil has been doing very well from the start of the season, as production in the region in question is 8% higher than the previous season. Brazil produced 20,75 million tons of sugar so far. The prosperous production has an influence on the market, which reflects the negative mood.
In the second half of July, Brazil processed 51,32 million tons of sugar cane in its main production region. That is 3,4% less than in the same period last year. From the start of the season, that level is 6,7% higher, at 332,8 million tons of sugar cane.
Rainfall in India
Sentiment regarding production expectations in India, the second largest sugar producer in the world, is also improving. Analysts write about the rainfall during the current monsoon. The Indian Meteorological Department reported above-average rainfall figures, which is good news for sugarcane cultivation. From the beginning of August, rainfall is higher than average. Yesterday, for example, there was an average of 3% more rain than normal across the country. This can benefit the offer.
Adjusted expectations
We previously wrote about the British market agency Czarnikow, which provides forecasts of world production several times a year. The forecast for global production was adjusted upwards each time. Partly because of the expectation of favorable rainfall in Asia. But the agency is now backtracking on that. World production is estimated at 2024 million tonnes for 25/186. The expectation has therefore been adjusted downwards by 3,7 million tons.
For the time being, Czarnikow expects a world sugar surplus of 5,9 million tons. Relatively dry weather in Brazil would have hurt production more than Czarnikow previously expected. Russian beet production is also said to be lower, due to extreme temperatures. But possible higher Indian production also supports the expectation of a sugar surplus.