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Sugar Market

Raw sugar

Raw sugar prices traded in a tight range of 12 to 13 cents/lb with a dip below 12 cents at the very end of April when the May contract came under strong pressure.  Any upward movement in prices towards the 13 cents level was met by strong Thai selling and consequently they fell back.

In mid May the No 11 price, basis July, is 11.8 cents/lb.

The long tail to the Northern Hemisphere crops has seen higher than expected production figures there.  In Thailand production (with a focus on raws) could pass the 14.8 Mt mark.  In India the harvest has exceeded expectations and as at early May an output estimate of 32.6 million tonnes was on the cards.  By end April, 2.7 million tonnes of exports, primarily raws, had been contracted, with over half exported by then.

The focus is now on Brazil where rains in March and April saw a late start to the 2019 crop.  High oil prices and a tight ethanol market resulted in sugar vs. ethanol parity favouring ethanol at the start of the crop but that effect has now moderated and some analysts are projecting that sugar output will recover and could be around the same as last year. However it is still early days.

In China prices have rallied over the past month thereby making both imports paying the duty and unofficial imports attractive again.  Interestingly the unofficial imports appear to be via Taiwan and Cambodia rather than via Myanmar where there has been a clamp down on informal trade.  The demand for imports from China will be a key metric to watch this year.

Some analysts are now predicting a global surplus of 2.5 million tonnes in 2018/19 and a deficit of 3 Mt in 2019/20.

Refined sugar

The May No. 5 contract expired at US$ 330/tonne. The nearby price (basis August) is, in mid May, 326/t. The White Premium has recently recovered to US$ 65/t and may rise further if refined shortfalls are to be avoided in the context of stronger demand from China and reducing availability from India and the EU

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