Sugar industry body ISMA revised its estimates for gross production of the sweetener by 9.5 lakh tonnes to 340 lakh tonnes in the marketing year ending September. In a statement, ISMA said the gross sugar production is now estimated at 340 lakh tonnes in 2023-24, as against the gross output of 366.2 lakh tonnes in the previous year. The net sugar production stood at 328.2 lakh tonnes during 2022-23 marketing year with a diversion of 38 lakh tonnes of sweetener for ethanol-making from sugarcane juice and B-heavy molasses.

For the current 2023-24, the government has so far allowed sugar diversion of only 17 lakh tonnes for production of ethanol via sugarcane juice/B-heavy molasses. This would mean net sugar production could be around 323 lakh tonnes. ISMA said the net sugar production (after diversion for ethanol) stood at 255.5 lakh tonnes up to February 29 of 2023-24 marketing year. As many as 466 sugar mills are still operating in the country by February end.

Meanwhile, global Sugar prices are sliding, adding to recent wave of losses as markets are eying elevated output in leading producer Brazil. Crop agency Unica has reported that sugar output in Brazil's key Center-South region in the second half of March was 183,000 MT, up 9% on year. Brazilian sugar output so far in the 2023-24 marketing year through March also jumped 25.7% on year to 42.425 MMT. Brazil's sugar mills have crushed 48.87% of total cane for sugar production this year, up from 45.86% last year. This has pulled the global Raw Sugar futures well under 20 cents per pound and the commodity further sank to a one year low near 19 cents mark. There is also a sense of a better monsoon this season pushing up India’s sugarcane yields and offering a boost to Sugar output. India’s Ministry of Earth Sciences announced this week that the country as a whole is likely to receive above normal rainfall during the south west monsoon from June to September 2024.

The FAO Sugar Price Index averaged 127.5 points in April, down 5.9 points (4.4 percent) from March, marking a second consecutive monthly decline and standing 21.9 points (14.7 percent) below its value in April 2023. The decrease in world sugar prices was mostly related to improved global supply prospects, notably due to larger-than-previously-anticipated outputs in India and Thailand. In addition, improved rainfall in Brazil in late March and early April, after a prolonged period of dry weather conditions, eased concerns over prospects for the recently started harvest and contributed to the month-on-month price decline. The weakening of the Brazilian real against the United States dollar also contributed to lowering sugar prices in April. By contrast, higher international crude oil prices and ethanol prices in Brazil contained the decrease in world sugar prices.

Outlook:

The Asia-Pacific Economic Cooperation (APCC) Climate Center has released its first monsoon forecast for India this year. The Center has given two distinct forecasts for the periods of April to June and July to September. As per the predictions, India is expected to receive above-average rainfall during its main monsoon season from July to September. The change in forecast is linked to the recent ENSO alert that anticipates a smooth shift from El Nino to La Nina condition. This could augur well for global Sugar output and will likely cap major advances in Sugar prices.

In India, with the majority of India's sugar mills having now completed crushing for the 2023/24 season, output so far stands at 31.59 million metric tons, according to the National Federation of Cooperative Sugar Factories Ltd (NFCSF). While this is down 1.8% from the previous full year, given the drought in major producing states like Karnataka and Maharashtra, the overall performance is reasonably good.