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Global Sugar futures continued to slide as markets are eying elevated output in leading producer Brazil and generally buoyant outlook for supplies. 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 global Raw Sugar futures failed to hold above 20 cents per pound mark and gave up once the level was broken. The futures tested lowest since November 2022. There is also a sense of a better monsoon this season pushing up India’s sugarcane yields and offering a boost to local Sugar output.
Sugar industry body ISMA has urged the government to allow 20 lakh tonnes of sugar exports in the current marketing year ending September. For the current 2023-24 marketing year (October- September), the government has not allowed sugar exports to boost domestic supply and control retail prices. In the preceding marketing year, sugar mills were allowed to export around 60 lakh tonnes of sugar.
In a statement, Indian Sugar and Bio-Energy Manufacturers Association (ISMA) said that the production has reached about 314 lakh tonnes as of the end of April 2024. With additional output of 5-6 lakh tonnes expected from mills in Karnataka and Tamil Nadu, the final net sugar production is estimated to be close to 320 lakh tonnes in 2023-24 marketing year (October-September). The net sugar production stood at 328.2 lakh tonnes during the 2022-23 marketing year with a diversion of 38 lakh tonnes of sweetener for ethanol-making from sugarcane juice and B-heavy molasses.
The US Department of Agriculture (USDA) has predicted that global sugar production will rise to 186 million metric tons this year, thanks to higher output in Southeast Asia compensating for a decline in Brazil, reported Market Watch. According to a report released by the USDA’s Foreign Agricultural Service, sugar production in Thailand is expected to increase by 16%, with smaller increases in India and China, offsetting an anticipated 1.5 million-metric-ton decrease in Brazil for the 2024/25 marketing year. While global sugar consumption is also on the rise, the world sugar market is likely to remain in surplus due to a slow recovery in global economies, which is dampening growth in consumer spending.
In Brazil, the decrease in sugar production is attributed to hot and dry weather affecting the crop. However, production is still expected to be the second-highest on record. Consumption and exports in Brazil are predicted to remain unchanged for the year. The marketing year for sugar began in May. During the 2023/24 marketing year, global sugar production reached 183.5 million tons. Brazil was the top producer with 45.5 million tons, followed by India with 34 million tons, and the European Union with 15 million tons. The U.S. was also a significant producer, with 8.3 million tons, and this is expected to increase to 8.4 million tons in 2024/25.
Global Ethanol Market To Grow At Impressive Pace Over Coming Decade
According to a latest update from Custom Market Insights, the demand of global Ethanol Market size & share was valued at approximately USD 83.5 Billion in 2022 and is expected to reach USD 85.8 Billion in 2023 and is expected to reach a value of around USD 145.6 Billion by 2032, at a compound annual growth rate (CAGR) of about 6.8% during the forecast period 2023 to 2032. Ethanol, often known as ethyl alcohol, is a form of alcohol that is frequently employed as a solvent, fuel, and ingredient in alcoholic drinks. It is an unstable, flammable, colorless liquid with a distinct odor. Ethanol is generated by yeast fermentation or synthesis of chemicals.
The growing emphasis on energy from renewable sources and decreasing greenhouse gas emissions has resulted in rising demand for ethanol as a biofuel. To reduce carbon intensity, governments throughout the world are enacting rules and regulations requiring ethanol to be blended with gasoline. Furthermore, advances in ethanol production methods, such as cellulosic ethanol production, are increasing efficiency and sustainability, fueling market development. In addition, ethanol’s growing application in industries other than gasoline, such as pharmaceuticals, beverages, and chemicals, is broadening demand.
Outlook:
The government has ruled out possibility of allowing sugar exports in the current 2023-24 season ending October despite industry’s persistent demand. With an opening stock of approximately 56 lakh tonnes as of October 1st, 2023, and a forecasted domestic consumption of 285 lakh tonnes for the season, Isma projects a significantly higher closing stock of 91 lakh tonnes by September 30th, 2024. This estimate, amounting to 36 lakh tonnes above the normative stock of 55 lakh tonnes, can potentially lead to additional costs for the millers on account of idle inventory and carrying costs, according to ISMA.
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