Sugar #11 Mar '24 (SBH24)

Description

The white crystalline substance called "sugar" is the organic chemical compound sucrose, one of several related compounds, all known as sugars. These include glucose, dextrose, fructose, and lactose. All sugars are members of the larger group of compounds called carbohydrates and are characterized by a sweet taste. Sucrose is considered a double sugar because it is composed of one molecule of glucose and one molecule of fructose. While sucrose is common in many plants, it occurs in the highest concentration in sugarcane (Saccharum officinarum) and sugar beets (Beta vulgaris). Sugarcane is about 7 to 18 percent sugar by weight, while sugar beets are 8 to 22 percent.

Sugarcane is a member of the grass family and is a perennial. Sugarcane is cultivated in tropical and subtropical regions worldwide, roughly between the Tropics of Cancer and Capricorn. It grows best in hot, wet climates where there is heavy rainfall followed by a dry season. The largest cane producers are Florida, Louisiana, Texas, and Hawaii. On a commercial basis, sugarcane is not grown from seeds but from cuttings or pieces of stalk.

Sugar beets, which are produced in temperate or colder climates, are annuals grown from seeds. Sugar beets do best with moderate temperatures and evenly distributed rainfall. The beets are planted in the spring and harvested in the fall. The sugar is contained in the root of the beet, but the sugars from beets and cane are identical. Sugar beet production takes place mostly in Europe, the U.S., China, and Japan. The largest sugar beet-producing states are Minnesota, Idaho, North Dakota, and Michigan. Sugar beets are refined to yield white sugar, and very little raw sugar is produced.

Sugar beets and sugarcane are produced in over 100 countries around the world. Of all the sugar produced, about 25% is processed from sugar beets, and the remaining 75% is from sugar cane. The trend has been that sugar production from cane is increasing relative to that produced from beets. Sugarcane is a perennial plant, while the sugar beet is an annual plant. Due to its longer production cycle, sugarcane production and the sugar processed from that sugarcane may not be quite as responsive to changes in price.

Sugar futures are traded at the ICE Futures U.S. exchange , the Bolsa de Mercadorias & Futuros (BM&F), the Tokyo Grain Exchange (TGE), and the ICE Futures Europe exchange.

Raw sugar is traded on the ICE Futures U.S. exchange, while white sugar is traded on the ICE Futures Europe exchange. The most actively traded contract is the No. 11 (World) sugar contract at the ICE exchange. The No. 11 contract calls for the delivery of 112,000 pounds (50 long tons) of raw cane centrifugal sugar from any of 28 foreign countries of origin and the United States. The ICE exchange also trades the No. 14 sugar contract (Domestic), which calls for the delivery of raw centrifugal cane sugar in the United States. Futures on white sugar are traded on the London International Financial Futures Exchange and call for the delivery of 50 metric tons of white beet sugar, cane crystal sugar, or refined sugar of any origin from the crop current at the time of delivery.

Prices - ICE World No. 11 sugar futures prices (Barchart.com symbol SB) posted their low for 2023 in January at 18.92 cents per pound. Sugar then soared to a 12-year high in April at 27.41 cents per pound on concern about global sugar production as an El Nino weather pattern disrupted global sugar production. An El Nino weather pattern typically brings heavy rain to Brazil and drought to India, negatively impacting sugar crop production. The Indian Sugar Mills Association (ISMA) in April cut its 2022/23 India sugar production estimate to 32.8 MMT, down -8.6% yr/yr. The lower production forecast caused India to cap its sugar exports at 6.1 MMT during the 2022/23 season (ending September 30), down from the record exports of 11.1 MMT seen in the previous season. India is the second-largest sugar producer in the world. A poor sugar crop in Thailand, the world's third-largest sugar producer and the second-largest sugar exporter, also boosted prices after the Thai Sugar Millers Corp cut its 2022/23 Thailand sugar production estimate to 11.4 MMT from a previous estimate of 13 MMT. Sugar prices retreated into June on larger production in Brazil after Unica reported that Brazil's 2023/24 sugar production through mid-June surged +32.1% to 9.528 MMT. However, prices ratcheted higher and posted a 12-year high in November of 28.14 cents per pound as India extended restrictions on sugar exports after October 31 to maintain adequate domestic supplies. India's Weather Department said the 2023 monsoon rain (June-September) was 6% below average and the lowest monsoon rainfall in 5 years. However, sugar prices retreated into year-end as the supply outlook improved. The USDA, in its bi-annual report released on November 23, projected that global 2023/24 sugar production would climb +4.7% y/y to a record 183.461 MMT. Sugar prices finished 2023 up +2.7% yr/yr at 20.58 cents per pound.

Supply - World production of centrifugal (raw) sugar in the 2023/24 marketing year (Oct 1 to Sep 30) is expected to rise by +4.7% yr/yr to 183.461 million metric tons. The world's largest sugar producers in 2023/24 are expected to be Brazil with 22.3% of world production, India with 19.6%, and the European Union with 8.5%. US sugar production in 2023/24 is expected to fall by -0.2% yr/yr to 8.372 million metric tons. US production of cane sugar in 2023/24 is expected to fall by -1.9% yr/yr to 3.985 million short tons, and beet sugar production is expected to rise by +4.2% yr/yr to 5.407 million short tons. World ending stocks in 2021/22 fell by -5.5% yr/yr to 47.531 million metric tons, below the 2018/19 record high of 52.827 million metric tons.

Demand - World domestic consumption of centrifugal (raw) sugar in 2021/22 remained unchanged from 2020/21 at 174.477 million metric tons. US domestic disappearance (consumption) of sugar in 2023/24 is expected to be down by -0.5% yr/yr at 12.790 million short tons.

Trade - World exports of centrifugal sugar in 2023/24 are expected to rise by +4.8% yr/yr to 67.409 million metric tons. The world's largest sugar exporters in 2023/24 are expected to be Brazil with 48.2% of total world exports, Thailand with 14.8%, and India with 9.6%.

US sugar exports in 2023/24 are expected to rise by +94.0% yr/yr at 160,000 short tons. US sugar imports in 2023/24 are expected to fall by -9.9% yr/yr to 2.840 million metric tons.

Information on commodities is courtesy of the cmdty Yearbook, the single most comprehensive source of commodity and futures market information available. Its sources - reports from governments, private industries, and trade and industrial associations - are authoritative, and its historical scope for commodities information is second to none. The CRB Yearbook is part of the Barchart product line. Please visit us for all of your commodity data needs.