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Weather factors will continue to affect the supply of sugar market, and there are still uncertainties in production
2023/8/2
Brazil: production increase from expectation to reality, pay attention to production rhythm
In the 2023/2024 cropping season, Brazil's production increase has turned from expectations to reality. Consulting agency Datagro said in a June report that sugarcane crushing in central and southern Brazil in 2023/2024 is expected to increase from the previous estimate of 598.5 million tons to 606.5 million tons, an increase of 10.6% from the previous cropping season, due to stable rainfall. Tian Li. The good rainfall from the beginning of the year to May makes the sugarcane yield in central and southern Brazil still have the potential to further increase. The rainfall is especially conducive to the production of sugarcane harvested in the last period of the cropping season. In addition, investment in sugar mills has increased as profits from sugar extraction have outpaced ethanol production since June last year. Early indications are that mills will spare no effort to maximize crushing operations and increase the proportion of cane used for sugar production. In view of the good production prospects, the agency has recently raised the estimated crushing volume of sugarcane for the 2023/2024 crop season in central and southern Brazil to 605 million to 620 million tons; the sugar production estimate has been raised to 38.5 million to 39 million tons, the most extreme forecast It is estimated to reach 40 million tons.
Although Brazil's bumper harvest is in sight, the rhythm of periodic crushing still interferes with the sugar market. The production progress in the main production areas in south-central Brazil slowed down slightly in June. Most institutions believe that the crushing volume will increase more, but the increase in sugar cane and sugar production is lower than market expectations. Raw sugar prices first fell and then rebounded, indirectly supporting raw sugar price.
On the one hand, the first ten days of June was disturbed by increased precipitation. Although the weather was relatively dry in late June, the sugar cane yield (ATR) was low, and the sugar yield per ton of sugarcane was only 133.04 kg, a year-on-year decrease of nearly 3%. The last crushing season was the lowest in the same period. The main reason was that the Brazilian sugar mills were eager to squeeze in the new crushing season, and some sugarcanes were not mature enough, which affected the yield per unit area, resulting in a lower crushing volume than market expectations.
On the other hand, judging from the data in the first ten days of July, the sugarcane crushing volume in central and southern Brazil was 48.373 million tons, an increase of 1.954 million tons compared with 46.419 million tons in the same period last year, and a year-on-year increase of 4.21%. The ATR of sugarcane was still lower than expected , a drop of 2.41 kg/ton from the same period. In terms of sugar production data, the sugar production was 3.241 million tons, an increase of 264,000 tons from 2.977 million tons in the same period last year, a year-on-year increase of 8.86%; the cumulative sugar production was 15.47 million tons, a year-on-year increase of 21.88%. On the whole, the data in the first half of July is still relatively bearish, and although the current sugar crushing is flat year-on-year, the progress is still behind compared with the same period in the 2020/2021 crushing season and 2021/2022 crushing season, which means that in the next few months The squeeze will be further accelerated. The sharp increase in production has also made the inventory pressure increasingly prominent. As of mid-June, the sugar industry inventory in central and southern Brazil reached 5.905 million tons, an increase of nearly 900,000 tons year-on-year.
The proportion of sugar production in this season continues to support the expectation of a large increase in production. As of early July, the proportion of sugar cane sugar production in sugar factories reached 50.01%, higher than 47.07% in the same period last year; the cumulative sugar-alcohol ratio reached 48.14%, compared with 43.54% in the same period last year. % increased by 4.60 percentage points, which is also the highest level since the same period in the 2016/2017 cropping season. The latest data shows that the discounted sugar price of hydrous ethanol in central and southern Brazil is 14.98 cents/lb, and the spot price of raw sugar is 25.36 cents/lb. The firm price of raw sugar has resulted in a huge price difference of over 10 cents/lb for sugar alcohols. In addition, because the Brazilian political circles tend to lower fuel prices, indirectly affect the rise in ethanol prices. However, there is also news that a Citi study shows that the Brazilian government's decision to increase the ethanol blend in gasoline from 27% to 30% will prompt the industry to divert an additional 3.5% of sugar to ethanol production. Nevertheless, the current advantage of sugar production is still obvious, and it is expected that the trend in which sugar production income will be significantly higher than that of ethanol will continue until the end of this cropping season. At present, the market’s median estimate of the proportion of sugar production in this cropping season has reached 48.5%, which is one of the highest levels in history. one.
In terms of weather, judging from recent weather conditions, frost occurred in some sugarcane areas in the southernmost part of Brazil in early July, and the precipitation in Parana and northeast production areas was relatively high, but it did not affect the main production areas such as Sao Paulo State. It is expected to affect production The impact is not significant, but the precipitation is expected to increase in late July and August, which may affect the production progress to a certain extent. However, due to the influence of the El Niño phenomenon, the temperature in the main producing areas is higher than normal years, which also reduces the probability of frost occurrence. For the fluctuation of future production, more worries come from the possibility that the El Niño phenomenon may bring higher than normal temperatures to the main producing areas of Brazil. Normal levels of rainfall thus have an impact on crush pace and cane sugar content.
In terms of exports, Brazil's sugar exports began to increase in June, reaching 3.082 million tons, exceeding 3 million tons for the first time in the past eight months, a 30.6% increase over the same period last year. From April to June in the 2023/2024 crushing season, Brazil exported a total of 6.5246 million tons of sugar, a year-on-year increase of 24.06%. In the absence of weather and logistics disturbances, Brazil's monthly exports are expected to be at a high level of 3 million to 4 million tons from July to October.
In terms of logistics, the port logistics congestion in the early stage has also eased to some extent. According to the data released by the shipping agency Williams, as of the week of July 19, the amount of sugar waiting to be shipped in Brazilian ports dropped from 3.9243 million tons a week ago to 3.7497 million tons. Trade flows have eased to some extent, which will put pressure on raw sugar prices.
India: Acreage increased, but export plans undecided
The 2022/2023 crushing season in India will come to an end. The latest data from the National Federation of Sugar Industries (NFCSF) of India shows that as of June 15 in the 2022/2023 crushing season, India's sugar production has reached 32.96 million tons, a year-on-year decrease of 2.46 million tons. Among them, Uttar Pradesh had the highest output of 10.54 million tons, and Mabang's sugar production was 10.53 million tons, both lower than the previous cropping season. For the next crop season, under the stimulus of sugarcane price hike to record high and ethanol production increase plan, there is still a trend of further expansion of sugarcane planting area in India in the future.
The central government of India will increase the fair and remunerative price (FRP) of sugarcane in the 2023/2024 cropping season by 100 rupees/ton to 3150 rupees/ton. The benchmark sugar yield rate is 10.25%. A corresponding increase or decrease of 30.7 rupees / ton premium. In addition, in order to protect the interests of sugarcane farmers, the government has also decided that there will be no deduction for sugar mills with a sugar yield of less than 9.5%, and these sugarcane farmers will be paid 2919.75 rupees/ The price of sugarcane per ton is 98.5 rupees/ton higher than the 2821.25 rupees/ton in the 2022/2023 cropping season.
In terms of planting area, according to the latest data released by the Indian Ministry of Agriculture, as of July 24, the planted area of sugarcane in India was 5.6 million hectares, an increase of 2.66% over last year's 5.334 million hectares, and higher than the historical average planting area of 4.885 million hectares in the same period.
In terms of exports, judging from the past two cropping seasons, India has continuously set new export highs without subsidies. For example, in the 2021/2022 cropping season, India exported a record 11 million tons of sugar. Coupled with the objective growth in consumption, domestic inventory It also fell to a low of nearly 5 cropping seasons below 6 million tons. It also makes it unlikely that India will allow additional exports from the current 6.1 million tonnes in the current marketing year ending Sept. 30.
For the future, the Indian government needs to have a precise understanding of next year's crushing season output before deciding whether to allow sugar exports in the next season. A decision on whether India will allow sugar exports for the next season is not expected until the first half of 2024. The performance of the monsoon this year and sugarcane production in the next two seasons (2023/2024 and 2024/2025) will be key issues. It is currently reported that India is unlikely to release new exports before the first quarter of next year. It is estimated that the total export volume in the 2023/2024 cropping season will be less than 4 million tons, and the pessimistic forecast is at the level of 2 million to 3 million tons. This also means that it is unlikely to provide more sugar sources for the international sugar market in the next two cropping seasons.
Recently, due to the uneven distribution of rainfall in Indian production areas, floods have occurred in some areas. At the same time, the rainfall in Mabang and Kabang production areas has also recovered to a certain extent. However, Mabang, the largest production area, still has a certain distance from the average rainfall in 2017-2022. Rainfall in Mabang was 71% below normal before early July, and Karnataka, the third-largest sugar-producing state, was also 55% below normal. In terms of reservoirs, since July, the water levels in Mabang, Kabang, and Uttar Pradesh have risen, but they are still slightly lower than the same period. In the later period, we need to pay attention to whether the future weather can increase the reservoir water storage to meet the later sugarcane growth needs.
Judging from the future weather, there will be moderate to heavy rain in the central and northern regions, and the wet weather will be conducive to the growth of sugarcane in northern India. As of now, the impact of El Nino on India is not obvious, but whether it can make up for the impact of the previous drought still depends on the weather conditions in the next two months. In addition, the blending ratio of gasoline and ethanol in India is expected to reach 11.5% in this cropping season. The government aims to reach 25% by 2025. It is expected that India’s sugarcane ethanol processing capacity will further increase in the next cropping season, further weakening the proportion of sugarcane sugar production. Ethanol is expected to The amount of diverted sugar will exceed 5 million tons, around 5.5 million tons. The general manager of Dwarikesh Sugar Factory in India said the company is planning to increase the production of ethanol instead of sugar. In the 2022/2023 crop season, the company has used about 139,000 tons of sugar production to support ethanol, and will try to produce more and more ethanol in the future. On the whole, the current market forecast for India's sugar production ranges from 31.6 million to 33 million tons, most of which are lower than the 32.7 million to 32.8 million tons this season.
Thailand: The drought in the production area is difficult to solve, and the output in the next crop season is worrying
Thailand has faced widespread drought since the beginning of the year. The national average rainfall has decreased by 28% year-on-year, which is also 10% lower than the average level. The emergence of the El Niño phenomenon may lead to further reductions in rainfall in the next two years. The country is also facing record-breaking rainfall this year. high temperature expectations. Although precipitation in Thailand has increased since July, and some areas have even experienced floods, the lack of long-term measures for floods and droughts in Thailand may exacerbate the impact of extreme weather on sugar production.
From the perspective of precipitation, the rainfall in major cities in the north is still lower than the average level in recent years, and historical conditions show that the later the precipitation recovers, the recovery of production is very limited. If there is no relatively sufficient precipitation before the end of August, Thailand's 2023/2024 Production during the cropping season is still not guaranteed. In addition, considering the alternative situation, it is expected that the area of sugarcane in the 2023/2024 cropping season will decrease slightly by 3%-5% due to the replanting of cassava. The market is pessimistic about Thailand’s sugar production in the 2023/2024 cropping season, which is estimated to be around 7.5 million tons, which is slightly optimistic It is estimated at 9.5 million tons, and there are still big differences in the expectations of different agencies, but they are all lower than the 2022/2023 cropping season.
In terms of exports, Thailand's sugar exports fell back to 605,000 tons in April, but still increased by 11.8% year-on-year, which was the highest level in the same period in the last three cropping seasons. From October 2022 to April 2023, Thailand will export a total of 4.395 million tons of sugar, a year-on-year increase of 8.21%. Due to inventory decline and El Nino phenomenon. The 2023/2024 crushing season will increase the production variables, and it is expected that the export volume of Thailand's sugar will gradually weaken in the later period.
Outlook: Market buying interest weakens, sugar demand may shift later
Index funds have been reducing their sugar positions as speculative interest in sugar fell to an eight-month low. From the perspective of CFTC positions, non-commercial long positions continued to fall after hitting a yearly high in early May. As of the week of July 18, the total positions of ICE raw sugar futures + options were 1,091,472 lots, a decrease of 4,604 lots from the previous week; speculative long positions 237,223 hands, an increase of 7,408 hands from the previous week; speculative short positions were 118,079 hands, an increase of 2,872 hands from the previous week; speculative net long positions were 119,144 hands, an increase of 4,536 hands from the previous week. Although it has rebounded recently, it is difficult to return to the previous high level. In addition, the net surplus of raw sugar accounted for 22.28%, although it was at a historical high during the same period, but it has also declined significantly since May. In addition, the most important fixed-price buyers of raw sugar, such as China and Indonesia, want to buy at 21 cents/lb, while the price of 24-25 cents/lb is already well above the 21 cents/lb range. Overall, it is unlikely that current prices will see enough demand unless raw sugar consumers are in a fairly favorable position.
On the whole, Brazil's high yield is in sight, good production prospects and obvious advantages in sugar production make this year's production estimated at 38.5 million to 40 million tons, putting pressure on the price trend of raw sugar as a whole. However, the rhythm of periodic crushing still interferes with the market. The production progress in the main production areas in central and southern Brazil has slowed down slightly since June, indirectly supporting the price of raw sugar. Moreover, the port logistics congestion in the early stage has also eased to a certain extent. It is expected that Brazil’s monthly exports will be at a high level of 3 million to 4 million tons from July to October, and the tense trade flow pattern has been suspended.
In the 2023/2024 cropping season, Brazil's production increase has turned from expectations to reality. Consulting agency Datagro said in a June report that sugarcane crushing in central and southern Brazil in 2023/2024 is expected to increase from the previous estimate of 598.5 million tons to 606.5 million tons, an increase of 10.6% from the previous cropping season, due to stable rainfall. Tian Li. The good rainfall from the beginning of the year to May makes the sugarcane yield in central and southern Brazil still have the potential to further increase. The rainfall is especially conducive to the production of sugarcane harvested in the last period of the cropping season. In addition, investment in sugar mills has increased as profits from sugar extraction have outpaced ethanol production since June last year. Early indications are that mills will spare no effort to maximize crushing operations and increase the proportion of cane used for sugar production. In view of the good production prospects, the agency has recently raised the estimated crushing volume of sugarcane for the 2023/2024 crop season in central and southern Brazil to 605 million to 620 million tons; the sugar production estimate has been raised to 38.5 million to 39 million tons, the most extreme forecast It is estimated to reach 40 million tons.
Although Brazil's bumper harvest is in sight, the rhythm of periodic crushing still interferes with the sugar market. The production progress in the main production areas in south-central Brazil slowed down slightly in June. Most institutions believe that the crushing volume will increase more, but the increase in sugar cane and sugar production is lower than market expectations. Raw sugar prices first fell and then rebounded, indirectly supporting raw sugar price.
On the one hand, the first ten days of June was disturbed by increased precipitation. Although the weather was relatively dry in late June, the sugar cane yield (ATR) was low, and the sugar yield per ton of sugarcane was only 133.04 kg, a year-on-year decrease of nearly 3%. The last crushing season was the lowest in the same period. The main reason was that the Brazilian sugar mills were eager to squeeze in the new crushing season, and some sugarcanes were not mature enough, which affected the yield per unit area, resulting in a lower crushing volume than market expectations.
On the other hand, judging from the data in the first ten days of July, the sugarcane crushing volume in central and southern Brazil was 48.373 million tons, an increase of 1.954 million tons compared with 46.419 million tons in the same period last year, and a year-on-year increase of 4.21%. The ATR of sugarcane was still lower than expected , a drop of 2.41 kg/ton from the same period. In terms of sugar production data, the sugar production was 3.241 million tons, an increase of 264,000 tons from 2.977 million tons in the same period last year, a year-on-year increase of 8.86%; the cumulative sugar production was 15.47 million tons, a year-on-year increase of 21.88%. On the whole, the data in the first half of July is still relatively bearish, and although the current sugar crushing is flat year-on-year, the progress is still behind compared with the same period in the 2020/2021 crushing season and 2021/2022 crushing season, which means that in the next few months The squeeze will be further accelerated. The sharp increase in production has also made the inventory pressure increasingly prominent. As of mid-June, the sugar industry inventory in central and southern Brazil reached 5.905 million tons, an increase of nearly 900,000 tons year-on-year.
The proportion of sugar production in this season continues to support the expectation of a large increase in production. As of early July, the proportion of sugar cane sugar production in sugar factories reached 50.01%, higher than 47.07% in the same period last year; the cumulative sugar-alcohol ratio reached 48.14%, compared with 43.54% in the same period last year. % increased by 4.60 percentage points, which is also the highest level since the same period in the 2016/2017 cropping season. The latest data shows that the discounted sugar price of hydrous ethanol in central and southern Brazil is 14.98 cents/lb, and the spot price of raw sugar is 25.36 cents/lb. The firm price of raw sugar has resulted in a huge price difference of over 10 cents/lb for sugar alcohols. In addition, because the Brazilian political circles tend to lower fuel prices, indirectly affect the rise in ethanol prices. However, there is also news that a Citi study shows that the Brazilian government's decision to increase the ethanol blend in gasoline from 27% to 30% will prompt the industry to divert an additional 3.5% of sugar to ethanol production. Nevertheless, the current advantage of sugar production is still obvious, and it is expected that the trend in which sugar production income will be significantly higher than that of ethanol will continue until the end of this cropping season. At present, the market’s median estimate of the proportion of sugar production in this cropping season has reached 48.5%, which is one of the highest levels in history. one.
In terms of weather, judging from recent weather conditions, frost occurred in some sugarcane areas in the southernmost part of Brazil in early July, and the precipitation in Parana and northeast production areas was relatively high, but it did not affect the main production areas such as Sao Paulo State. It is expected to affect production The impact is not significant, but the precipitation is expected to increase in late July and August, which may affect the production progress to a certain extent. However, due to the influence of the El Niño phenomenon, the temperature in the main producing areas is higher than normal years, which also reduces the probability of frost occurrence. For the fluctuation of future production, more worries come from the possibility that the El Niño phenomenon may bring higher than normal temperatures to the main producing areas of Brazil. Normal levels of rainfall thus have an impact on crush pace and cane sugar content.
In terms of exports, Brazil's sugar exports began to increase in June, reaching 3.082 million tons, exceeding 3 million tons for the first time in the past eight months, a 30.6% increase over the same period last year. From April to June in the 2023/2024 crushing season, Brazil exported a total of 6.5246 million tons of sugar, a year-on-year increase of 24.06%. In the absence of weather and logistics disturbances, Brazil's monthly exports are expected to be at a high level of 3 million to 4 million tons from July to October.
In terms of logistics, the port logistics congestion in the early stage has also eased to some extent. According to the data released by the shipping agency Williams, as of the week of July 19, the amount of sugar waiting to be shipped in Brazilian ports dropped from 3.9243 million tons a week ago to 3.7497 million tons. Trade flows have eased to some extent, which will put pressure on raw sugar prices.
India: Acreage increased, but export plans undecided
The 2022/2023 crushing season in India will come to an end. The latest data from the National Federation of Sugar Industries (NFCSF) of India shows that as of June 15 in the 2022/2023 crushing season, India's sugar production has reached 32.96 million tons, a year-on-year decrease of 2.46 million tons. Among them, Uttar Pradesh had the highest output of 10.54 million tons, and Mabang's sugar production was 10.53 million tons, both lower than the previous cropping season. For the next crop season, under the stimulus of sugarcane price hike to record high and ethanol production increase plan, there is still a trend of further expansion of sugarcane planting area in India in the future.
The central government of India will increase the fair and remunerative price (FRP) of sugarcane in the 2023/2024 cropping season by 100 rupees/ton to 3150 rupees/ton. The benchmark sugar yield rate is 10.25%. A corresponding increase or decrease of 30.7 rupees / ton premium. In addition, in order to protect the interests of sugarcane farmers, the government has also decided that there will be no deduction for sugar mills with a sugar yield of less than 9.5%, and these sugarcane farmers will be paid 2919.75 rupees/ The price of sugarcane per ton is 98.5 rupees/ton higher than the 2821.25 rupees/ton in the 2022/2023 cropping season.
In terms of planting area, according to the latest data released by the Indian Ministry of Agriculture, as of July 24, the planted area of sugarcane in India was 5.6 million hectares, an increase of 2.66% over last year's 5.334 million hectares, and higher than the historical average planting area of 4.885 million hectares in the same period.
In terms of exports, judging from the past two cropping seasons, India has continuously set new export highs without subsidies. For example, in the 2021/2022 cropping season, India exported a record 11 million tons of sugar. Coupled with the objective growth in consumption, domestic inventory It also fell to a low of nearly 5 cropping seasons below 6 million tons. It also makes it unlikely that India will allow additional exports from the current 6.1 million tonnes in the current marketing year ending Sept. 30.
For the future, the Indian government needs to have a precise understanding of next year's crushing season output before deciding whether to allow sugar exports in the next season. A decision on whether India will allow sugar exports for the next season is not expected until the first half of 2024. The performance of the monsoon this year and sugarcane production in the next two seasons (2023/2024 and 2024/2025) will be key issues. It is currently reported that India is unlikely to release new exports before the first quarter of next year. It is estimated that the total export volume in the 2023/2024 cropping season will be less than 4 million tons, and the pessimistic forecast is at the level of 2 million to 3 million tons. This also means that it is unlikely to provide more sugar sources for the international sugar market in the next two cropping seasons.
Recently, due to the uneven distribution of rainfall in Indian production areas, floods have occurred in some areas. At the same time, the rainfall in Mabang and Kabang production areas has also recovered to a certain extent. However, Mabang, the largest production area, still has a certain distance from the average rainfall in 2017-2022. Rainfall in Mabang was 71% below normal before early July, and Karnataka, the third-largest sugar-producing state, was also 55% below normal. In terms of reservoirs, since July, the water levels in Mabang, Kabang, and Uttar Pradesh have risen, but they are still slightly lower than the same period. In the later period, we need to pay attention to whether the future weather can increase the reservoir water storage to meet the later sugarcane growth needs.
Judging from the future weather, there will be moderate to heavy rain in the central and northern regions, and the wet weather will be conducive to the growth of sugarcane in northern India. As of now, the impact of El Nino on India is not obvious, but whether it can make up for the impact of the previous drought still depends on the weather conditions in the next two months. In addition, the blending ratio of gasoline and ethanol in India is expected to reach 11.5% in this cropping season. The government aims to reach 25% by 2025. It is expected that India’s sugarcane ethanol processing capacity will further increase in the next cropping season, further weakening the proportion of sugarcane sugar production. Ethanol is expected to The amount of diverted sugar will exceed 5 million tons, around 5.5 million tons. The general manager of Dwarikesh Sugar Factory in India said the company is planning to increase the production of ethanol instead of sugar. In the 2022/2023 crop season, the company has used about 139,000 tons of sugar production to support ethanol, and will try to produce more and more ethanol in the future. On the whole, the current market forecast for India's sugar production ranges from 31.6 million to 33 million tons, most of which are lower than the 32.7 million to 32.8 million tons this season.
Thailand: The drought in the production area is difficult to solve, and the output in the next crop season is worrying
Thailand has faced widespread drought since the beginning of the year. The national average rainfall has decreased by 28% year-on-year, which is also 10% lower than the average level. The emergence of the El Niño phenomenon may lead to further reductions in rainfall in the next two years. The country is also facing record-breaking rainfall this year. high temperature expectations. Although precipitation in Thailand has increased since July, and some areas have even experienced floods, the lack of long-term measures for floods and droughts in Thailand may exacerbate the impact of extreme weather on sugar production.
From the perspective of precipitation, the rainfall in major cities in the north is still lower than the average level in recent years, and historical conditions show that the later the precipitation recovers, the recovery of production is very limited. If there is no relatively sufficient precipitation before the end of August, Thailand's 2023/2024 Production during the cropping season is still not guaranteed. In addition, considering the alternative situation, it is expected that the area of sugarcane in the 2023/2024 cropping season will decrease slightly by 3%-5% due to the replanting of cassava. The market is pessimistic about Thailand’s sugar production in the 2023/2024 cropping season, which is estimated to be around 7.5 million tons, which is slightly optimistic It is estimated at 9.5 million tons, and there are still big differences in the expectations of different agencies, but they are all lower than the 2022/2023 cropping season.
In terms of exports, Thailand's sugar exports fell back to 605,000 tons in April, but still increased by 11.8% year-on-year, which was the highest level in the same period in the last three cropping seasons. From October 2022 to April 2023, Thailand will export a total of 4.395 million tons of sugar, a year-on-year increase of 8.21%. Due to inventory decline and El Nino phenomenon. The 2023/2024 crushing season will increase the production variables, and it is expected that the export volume of Thailand's sugar will gradually weaken in the later period.
Outlook: Market buying interest weakens, sugar demand may shift later
Index funds have been reducing their sugar positions as speculative interest in sugar fell to an eight-month low. From the perspective of CFTC positions, non-commercial long positions continued to fall after hitting a yearly high in early May. As of the week of July 18, the total positions of ICE raw sugar futures + options were 1,091,472 lots, a decrease of 4,604 lots from the previous week; speculative long positions 237,223 hands, an increase of 7,408 hands from the previous week; speculative short positions were 118,079 hands, an increase of 2,872 hands from the previous week; speculative net long positions were 119,144 hands, an increase of 4,536 hands from the previous week. Although it has rebounded recently, it is difficult to return to the previous high level. In addition, the net surplus of raw sugar accounted for 22.28%, although it was at a historical high during the same period, but it has also declined significantly since May. In addition, the most important fixed-price buyers of raw sugar, such as China and Indonesia, want to buy at 21 cents/lb, while the price of 24-25 cents/lb is already well above the 21 cents/lb range. Overall, it is unlikely that current prices will see enough demand unless raw sugar consumers are in a fairly favorable position.
On the whole, Brazil's high yield is in sight, good production prospects and obvious advantages in sugar production make this year's production estimated at 38.5 million to 40 million tons, putting pressure on the price trend of raw sugar as a whole. However, the rhythm of periodic crushing still interferes with the market. The production progress in the main production areas in central and southern Brazil has slowed down slightly since June, indirectly supporting the price of raw sugar. Moreover, the port logistics congestion in the early stage has also eased to a certain extent. It is expected that Brazil’s monthly exports will be at a high level of 3 million to 4 million tons from July to October, and the tense trade flow pattern has been suspended.
In addition, due to the current high sugar price, it is also a test for importing countries. It is difficult for the market to have a large number of new buyers to continue to push up the market price. The backward shift in demand is also a short-term negative for raw sugar. The trend of sugar is relatively weak. However, in the medium and long term, there is limited room for global production increase in the 2023/2024 cropping season, and Southeast Asian production areas are still troubled by the El Niño phenomenon. Although some parts of India and Thailand have experienced a certain amount of precipitation since July, whether they can make up for the impact of the previous drought still depends on the weather conditions in the next two months, and there is still great uncertainty in production, and the weather problems in the later period Or a new bullish growth point, weather problems may continue to affect the supply of sugar market, raw sugar may continue to rise after the adjustment.
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