Sugar

Prices of sugar were unchanged in the key wholesale markets of Mumbai and Muzaffarnagar in thin trade. In Muzaffarnagar and Mumbai, sugar was unchanged from previous close. There was no bulk demand for sugar in the market, only day-to-day demand is keeping prices steady. On the NCDEX, the most active July contract of sugar traded up 0.5% from the previous close.

Mills across Uttar Pradesh produced 8.74 million tonne sugar during Oct 1-May 15, up 28.4% on year. Total sugar production by mills in Uttar Pradesh in the year-ago period was 6.81 million tonne. Mills in the state have crushed 82.36 million tonne cane so far, compared with 64.18 million tonne in the year-ago period. Average sugar recovery in Uttar Pradesh was at 10.6%, unchanged on year. With five mills in Uttar Pradesh still operating, market participants expect sugar output in the state this season to touch an all-time high of 8.75 million tonne, surpassing the previous high of 8.47 million tonne in 2006-07. Mills, which are still running, are likely to wind up crushing operations by next week.

Sugar output in Tamil Nadu is seen falling more than 45% to 600,000 tonne in 2017-18 (Oct-Sep) from an estimated 1.1 million tonne this year. Last year, mills in the state had produced 1.37 million tonne of sugar. Sugar output next season is seen declining because of successive years of meagre rainfall in the state and a drop-in cane acreage. Tamil Nadu received 62% below-normal rainfall during the key northeast monsoon season in Oct-Dec. Back-to-back years of deficit rainfall and a severe drought this year have also dragged groundwater to abysmally low levels in the state. The state has a capacity to produce around 3 million tonne sugar annually.

Prices of sugar were unchanged in key wholesale markets of Mumbai and Delhi today in thin trade. Sugar prices had risen last week in spot markets of north India due to increase in retail demand because the wedding season. Prices are seen falling in north India due to higher-than-expected sugar output in Uttar Pradesh. Mills in Uttar Pradesh produced 8.74 mln tn sugar during Oct 1-May 15, up 28.4% on year the most-active May contract was up 0.5%. Prices of sugar are seen up in the near term as demand for the commodity is likely to rise ahead of Ramzan. On NCDEX, the most active July contract of sugar was down 0.2% from previous close.

Prices of sugar fell in Mumbai and Kolhapur, in Maharashtra, due to weak buying even as mills lowered their prices to trigger demand. Demand has been subdued for almost two weeks in the state. In the key wholesale markets of Kolhapur and Mumbai, sugar was sold down 5 rupees from Thursday. In the other key wholesale markets of Muzaffarnagar and Delhi, prices were unchanged as trade remained thin. Demand for sugar is also subdued in the country as forecast of normal monsoon in 2017 has dampened the sentiment. Adequate rainfall may help in reviving the sugarcane crop across the southern part of India, which is facing acute shortage of water. Sugar prices in the near term may further fall as supplies are expected to increase once the imported sugar arrives in the market. On the NCDEX, the most-active July contract of sugar traded up 0.2% from the previous close.

Mills in Brazil Centre-South region produced 1.12 million tonne of sugar during the second fortnight of April, down 38.1% from 1.81 million tonne produced a year ago. The fall in sugar output can be attributed to delay in milling and low sugar recovery from cane. Mills in the region, which accounts for more than 90% of Brazil total sugar output, crushed 24.09 million tonne of sugarcane during Apr 2017-18 down 33.5% on year. Mills in the region crushed 41.71 million tonne of cane during April, down 39.7% on year. They produced 1.83 million tonne of sugar, down 43.8% on year. Of the total cane crushed, around 41.5% was used for sugar production, while 58.5% was used to make ethanol. Mills in Brazil Centre-South region are likely to produce 35.2 million tonne of sugar this season compared with 35.6 million tonne produced in the 2016-17 (Apr-Mar) season.

The Directorate General of Foreign Trade has reallocated quota for the import of 23,798 tonne raw sugar for mills in the south and west zones. The Directorate General of Foreign Trade had earlier allotted a quota of 9,858 tonne raw sugar to NCS Sugar.

Prices of sugar in the key wholesale markets of Delhi were up due to improved demand as consumption has increased amid wedding season. In Delhi, the sweetener was sold up 5 rupees per 100 kg from previous close. In Mumbai, prices of sugar were unchanged amid thin trade. On the NCDEX, the most-active May contract was up 1.8%.

India, the world biggest sugar consumer, has no plans to allow extra imports of the sweetener as stocks held in mills will suffice, Food Minister Ram Vilas Paswan said on Thursday. Last month, the government allowed imports of half a million tonnes of duty-free raw sugar, as a drought cut output below consumption for the first time in seven years. Traders were speculating that the government could soon be forced to allow imports of an extra 500,000 to 1 million tonnes to meet local demand, estimated at 24-25 million tonnes a year. Local sugar prices are steady around 38,000 rupees ($590.38) a tonne despite an uptick in demand during the summer months when sales of ice cream and cold drinks soar, potentially boosting demand for sugar.

The issue about the sugar sector currently buzzing in the market is that there is no congruency between the sugar cane and sugar prices in the state of Uttar Pradesh. Market analysts and top honchos of sugar companies believe that the UP government is likely to fix the issue of sugarcane prices soon. Upcoming Sugar year starting on October 1 is likely to see the well balance of production and consumption of sugar. In current trading session, the sugar stocks are trading mostly higher. Dwarikesh sugar is trading higher by 1.05%. Dhampur Sugar stock is trading higher by 0.13%. Uttam Sugar is trading higher by 0.08%. Balrampur Chini stock is trading higher by 1.2%.

Raw sugar futures on ICE were slightly lower on Thursday in a modest retreat after rising for three straight sessions as the market awaited the release of Brazilian harvest data. July raw sugar fell 0.08 cent, or 0.5 percent, to 15.76 cents per lb. (1LB = 0.4535924 KG). The front month contract had risen by 2.6 percent on Wednesday. harvest data for centre-south Brazil was due to be issued by growers’ association UNICA on Thursday covering the second half of April. crush was expected to have been 26 million tonnes, down 28 percent, year-on-year.

Demand from Stuckists pushed sugar prices up in the wholesale market of Muzaffarnagar and Delhi. Medium-grade sugar was sold up 10-20 rupees in Muzaffarnagar and in Mumbai. Demand of the sugar from other states such as Rajasthan and Gujarat was offset by forecast of normal monsoon in 2017. On the National Commodity and Derivatives Exchange, the May sugar futures were down as investors liquidated their positions ahead of staggered delivery from previous close. May sugar contract was down 0.4% and the July futures were up 0.1%.

U.S. fiscal year 2016/17 beet sugar production is decreased 64,000 short tons, raw value (STRV) based on lower expected sucrose recovery. Cane sugar production in Texas is reduced by 2,795 STRV based on final processor reporting. TRQ imports entering under Free Trade Agreements are increased by 2,555 STRV. Deliveries for human consumption are increased by 100,000 STRV based on pace to date. Ending stocks for 2016/17 are estimated at 1.477 million STRV. Sugar production for 2017/18 is projected at 8.700 million STRV, the sum of beet sugar production of 4.950 million and cane sugar production of 3.750 million. Imports for 2017/18 are projected at 3.858 million STRV and are comprised of TRQ imports of 1.373 million; re-export imports of 175,000; imports from Mexico of 2.301 million; and high-tier tariff imports of 10,000. Projected 2017/18 TRQ imports of specialty sugar include only the WTO minimum quantity because any additional quantities have not been announced by the Secretary of Agriculture. Exports for 2017/18 are projected at 25,000 STRV. Deliveries for human consumption are expected to increase 1.0 percent year-over-year to 12.322 million STRV. Ending stocks for 2017/18 are projected residually at 1.534 million, implying an ending stocks-to-use ratio of 12.3 percent. For 2016/17, Mexico sugar exports to non-U.S. destinations are reduced by 58,919 metric tons (MT) to 110,000 based on pace to date. Product re-export deliveries under the IMMEX program are increased 60,000 MT to 390,000 to match the total now estimated by Mexico authorities for 2015/16. Ending stocks are estimated residually at 1.342 million MT, an increase of 48,919 over last month. For 2017/18, Mexico sugar production is projected at 6.225 million MT based on a sugarcane crop of 55.000 million and a recovery of about 11.3 percent. Combined per capita consumption of sugar and HFCS for 2017/18 is projected the same as for 2016/17. With flat HFCS consumption, sugar deliveries for human consumption for 2017/18 are projected at 4.528 million. Exports to the United States are based on U.S. Needs as defined in the Suspension Agreements but, assuming additionally, that U.S. specialty sugar imports will be set at the same level as initially established for 2016/17.

In terms of containers, sugar export from Brazil rose 14% on year to 591,121 tonne in Jan-Mar. Brazil is the largest producer and exporter of the commodity. The main destination of exports was Myanmar at 125,560 tonne, followed by South Africa at 55,331 tonne. Most exports of sugar in containers is crystal sugar, also known as whites. Brazil exports mainly raw sugar in bulk vessels. The most active July sugar on the ICE was up 1.2% from the previous close.