Analysis Sugar
Sugar prices continue to climb steadily
While the sugar prices continue to rise, the developments in Brazilian and Indian production continue to make headlines. Where production in Brazil is ahead, there are concerns in India about the lack of rainfall. Meanwhile, the European Commission reports in their latest publication on the consequences of the abundant rainfall in Europe.
The upward trend in sugar prices in New York and London is now becoming clearer. Apart from the extremes, prices are slowly moving upwards. In mid-May, the prices dipped to almost the lowest point in a year and a half, partly due to the relatively strong start of the Brazilian season. Since then, the prices have been climbing and are now at $427.92 per ton in New York and $570.10 per ton in London. Currently, New York is at the highest point in over a week, while London reached the same level in over a month and a half.
On one hand, the rise contrasts with the latest published Unica data, the sugar association of Brazil. The number one producer of sugarcane crushed 140.7 million tons of sugarcane from the beginning of the season until the end of May, which is 11.2% above the level of the same period last year. Expansion of acreage and favorable weather conditions have led to a good start of the season.
But there is another country currently facing less favorable reports. Last week, we wrote about the monsoon rains in India that were below last year's level. This is not conducive to the production of the second largest producer. Last Friday, reports came in that heavy rains have fallen in some parts of India, with severe flooding in the Northeast. If the rainfall comes, it will likely boost production. Additionally, there are increasing concerns about the existing Indian export restrictions. The Indian government has stated that they are not yet revising the restrictions. This news will likely also drive sugar prices on futures markets.
Too much water for European sugar beets
Closer to home, it has been extremely wet, affecting various crops in Europe. This is now confirmed in the latest JRC Mars Bulletin from the European Commission. An abundance of water has hindered crop growth in the Benelux, Western Germany, Northeast France, and Northern Italy. The European Commission now expects the yield per hectare for sugar beets to decrease. In May, a quantity of 75.4 tons per hectare was expected, which has been revised down to 74.4 tons per hectare for June. This is still above the five-year average of 73.2 tons per hectare.
