The author of this article is Galaxy Agricultural Products Research.
Summary of the Foreword
In early November, the price of raw sugar hit 2814 cents pound to a new high. And then,Although raw sugar** remains high, it is difficult to see a new high. In the context of the game between the long and short sides and the absence of new bullish factors in the international sugar market, the CONAB agency's larger-than-expected bumper yield estimate for Brazil this crushing season triggered the market's reassessment of the gap between supply and demand balance next year, stimulating the acceleration of the ICE raw sugar market. Close long positions, this week.
Fourth, on Friday, the two trading days of ice raw sugar ** plunged sharply**, to Friday's main March raw sugar ***095 cents, or 36%, and the settlement price was quoted at 25 per pound09 cents, hit a three-month low of 24 intraday95 cents, the contract fell 7% for the week. In addition, the main March contract of ice white sugar ** ***20$30, down 28%, and the settlement price was quoted at 696 per tonne$80, falling below the round figure mark of $700 per tonne.
At the beginning of December, the foreign sugar market broke down sharply, and the phased supply and demand pattern and expected mentality of the market weakened. On the supply side, the expected production cuts in India and Thailand have been reflected in the market, while Brazil's record sugar production and export volume "strong reality" put pressure on sugar prices and limited the upside of raw sugar prices. At present, the biggest support for international sugar prices is India's zero sugar exports in the new crushing season, but it will take a long time for the news to be falsified, and the price spread of raw white has been maintained above 130 US dollars and reached more than 140 US dollars this week, indicating that the demand side is strong. To sum up,Although the phased tight pattern of the ** flow has not been alleviated, the current external sentiment is pessimistic and needs to wait for the release of emotions. In the short term, it is necessary to pay attention to the impact of the international sugar spot market on the marketIn the medium to long term, it is also necessary to pay attention to the extent of India's sugar production reduction, ethanol plans and export policies.
Body
OneReview at home and abroad:** Tension at the end promotes internal and external resonance, and then policy disturbance leads to internal and external differentiation
In terms of the international sugar market, the global sugar supply in the 2022 23 crushing season is in short supply, and the flow is tight, and sugar prices continue to be in the current stage of the bull market in the first three quarters. In the fourth quarter, Brazil entered the end of the crushing season, and various market institutions expected a high degree of consistency in Brazil's bumper harvest, resulting in pressure on raw sugar**Port congestion in Brazil, blocked exports, and uncertainty over production cuts and export policy in the northern hemisphere are the focus of market attention. On the other hand, in the domestic sugar market, low inventories, domestic sugar production reductions and high consumption recovery expectations have pushed domestic sugar prices all the way up, and internal and external linkages and raw sugar have stimulated Zheng Sugar to record new highs. Then, after spending the peak sugar season in summer, the landing of round reserves and dumping of reserves and the pessimism of the market worried about the coming of dumping again superimposed on the import volume exceeding expectations, and the domestic stage weakened. Then the domestic sugar ** entered a high level of consolidation, and the divergence between the long and short sides on the future trend began to intensify.
IIInternationalSugar market supply and demand pattern: various institutions have lowered the supply and demand gap of the international sugar market this season, but the stage of tension has not yet eased
From the perspective of the dynamics of the international sugar market, the global sugar market in 2023 and 24 may remain in a tight balance between supply and demand, dragged down by the expected production reduction of major producing countries in the northern hemisphere. Previously, due to favorable weather and rainfall, as well as a historically high sugar alcohol ratio, Brazil is expected to further increase the possibility of the country's sugar production and suppress the upward movement of raw sugar**On the other hand, the main producing countries in the northern hemisphere, which had benefited from the adverse impact of El Niño on the weather, the original sugar plate in the year was boosted by the expected reduction of rainfall in India and Thailand. Affected by El Niño, India and Thailand may reduce production, and the expectation of tight flow has been reflected in the main raw sugar contract of 27 cents lbs. Although Brazil has a bumper sugar production this season, based on the decline in the estimated production of some countries and regions due to dry weather and reduced planting area, major institutions have predicted that there may be a certain gap between global sugar supply and demand in the 2023 24 season. The International Sugar Organization (ISO) released on November 15 to estimate the global sugar shortage for the 2023 24 crushing season to 330,000 tons, with an estimated global sugar production of 1798.8 billion tonnes (August estimate of 1.8 billion.)748.4 billion tons);Global sugar consumption is projected at 1802.2 billion tonnes, up from 1769.6 billion tons. Global sugar production will be 2.4 million tonnes below expected consumption in the 2023 24 crushing season, the consultancy CovrigAnalytics said in a Nov. 13 report. Sugar increases in countries such as Brazil, Russia and China will not be enough to offset declines in India and Thailand. Crops in both countries are mainly affected by insufficient rainfall. CovrigAnalytics **Global 2023 24 crushing season sugar production is 187.5 billion tonnes, down from 189.4 billion tons;Sugar demand is expected to be 189.8 billion tonnes, up from 1881.6 billion tons. According to the latest release from broker and analyst Stonex**, global sugar demand for the 2023 24 crushing season (October-September) is expected to be 192.2 billion tonnes, while production is estimated at 191.9 billion tonnes, with a slight shortfall of around 290,000 tonnes** expected, as high production in Brazil is offset by a reduction in Asia. From the perspective of sugar flow, from the fourth quarter, by the northern hemisphere main producing countries sugar production, exports are expected to decrease, the flow or will appear a small gap, although this season Brazil's record sugar production will make up, but the global sugar market flow will still tighten, resulting in the concentration of the end or will be further improved, the follow-up needs to focus on the impact of Brazil's rainy season sugar production and export volume on the flow. Due to the sharp decline in Indian inventories this season, zero exports in the second half of this year are already expected, and if the ban on exports in the 2023 24 season is expected to affect more of the first half of next year, it may lead to an increase in the market gap of at least 2 million to 3 million tons;Thailand's sugar production and export volume are expected to decline, and the output reduction of India and Thailand is expected to be 6 million to 7 million tons, coupled with the downward revision of production in other countries and the expectation of low growth in global sugar consumption, many institutions have almost the same pessimistic expectations for global sugar ** flow and supply and demand prospects, and raw sugar ** has risen to a nearly 12-year high. In early November, the price of raw sugar hit 2814 cents pound to a new high. Then, although the raw sugar ** remains high, it is difficult to see a new high. In the context of the game between the long and short sides and the absence of new bullish factors in the international sugar market, the CONAB agency's larger-than-expected bumper yield estimate for Brazil this crushing season triggered the market's reassessment of the gap between supply and demand balance next year, stimulating the acceleration of the ICE raw sugar market. Close long positions, this week.
Fourth, on Friday, the two trading days of ice raw sugar ** plunged sharply**, to Friday's main March raw sugar ***095 cents, or 36%, and the settlement price was quoted at 25 per pound09 cents, hit a three-month low of 24 intraday95 cents, the contract fell 7% for the week. In addition, the main March contract of ice white sugar ** ***20$30, down 28%, and the settlement price was quoted at 696 per tonne$80, falling below the round figure mark of $700 per tonne. At the beginning of December, the foreign sugar market broke down sharply, and the phased supply and demand pattern and expected mentality of the market weakened. On the supply side, the expected production cuts in India and Thailand have been reflected in the market, while Brazil's record sugar production and export volume "strong reality" put pressure on sugar prices and limited the upside of raw sugar prices. At present, the biggest support for international sugar prices is India's zero sugar exports in the new crushing season, but it will take a long time for the news to be falsified, and the price spread of raw white has been maintained above 130 US dollars and reached more than 140 US dollars this week, indicating that the demand side is strong. To sum up, although the phased tight pattern of the first flow has not been alleviated, the current external market sentiment is pessimistic, and it is necessary to wait for the release of emotions, and it is necessary to pay attention to the impact of the international sugar spot market on the disk in the future. 
IIIInternational Sugar Market: BrazilAt the end of the crushing season, production is estimated to be a record, and exports are huge in November
Brazil plays an important role in the global sugar market, and in the context of global sugar prices and high sugar profits this year, Brazil has been increasing its production of sugar since the beginning of the crushing season, with record sugar production ratios, and Brazilian sugar mills are producing sugar at a sugar ratio close to the limit. According to the latest biweekly report of UNICA, in the first half of November, the sugarcane crush in the south-central region of Brazil was 3,47720,000 tons, compared with 2,632 in the same period last year40,000 tons, an increase of 84480,000 tons, a year-on-year increase of 3209%；Sugarcane ATR is 13269kg tonnes, up from 137 in the same period last year18kg tons down 449kg tons;The sugar production ratio is 4981%, up from 48 in the same period last year61% increased by 120%；Ethanol production 163.8 billion liters, up from 12.8 billion in the same period last year700 million liters, an increase of 36.8 billion liters, a year-on-year increase of 2892%；Sugar production was 2.19 million tons, up from 1.67 million in the same period last year30,000 tons, an increase of 5170,000 tons, a year-on-year increase of 3092%。The third sugar production estimate of the Brazilian National Commodities ** Company (CONAB) this year is nearly 6 million tons higher than the previous estimate, and considering that there is a certain deviation between the agency's estimate and the fixed production in previous years, and the heavy rainfall in December is prone to affect the progress of sugar production, we believe that the estimated output data may deviate from the actual production estimate。Brazil's 2023 24 crushing season sugarcane production is expected to hit a record high of 6., according to a report released by Conab on Nov. 2977.6 billion tons, an increase of 10 percent year-on-year9%；The output of sugar was 46.88 million tons, a year-on-year increase of 274%；The area under sugarcane cultivation is estimated at 8.35 million hectares;Ethanol production, including ethanol made from corn, is expected to be 340500 million liters. Conab expects sugarcane production in the south-central region of Brazil to be 6140.8 billion tons, an increase of 11 percent year-on-year6%。According to the data released by Conab in previous years, there is a certain deviation between the estimated and fixed yields, and the deviation is not significantly reduced due to the proximity to the harvest time. Conab expects Brazilian sugar production at 46.88 million tonnes, and after excluding sugar production from other regions (here we estimate around 3.6 million tonnes), we presume that Brazil's south-central production is around 43.28 million tonnes. According to UNICA's bi-weekly report for the current season, 37.87 million tons of sugar have been produced in central and southern Brazil, and about 5.4 million tons of sugar need to be produced this season. Considering that the rainy season in Brazil has arrived, according to historical data, heavy rainfall is likely to occur in December in previous years, which may lead to poor sugarcane crushing in sugar mills and affect the progress of sugar production, so we believe that there may be a deviation between the estimated output and the actual production.
In November, the premium of Brazilian raw sugar recovered, and the spot price of Brazilian raw sugar remained high, which stimulated a further increase in the price of Brazilian sugar alcohol, and the spread between raw sugar and ethanol remained around 13 cents pound. Stimulated by the poor, the sugar alcohol ratio in the first half of November in south-central Brazil was 4981%。
On the export front, Brazil's sugar exports have recently increased and hit a new high, boosted by the reality of a bumper crop this season and strong external demand. Brazil's sugar exports totalled 3.68 million mt in November, up 10% compared to the same period last year and the highest level in three years, data released by SECEX on Friday showed. There was also a significant increase in sugar loading in October, when the country loaded about 2.9 million tonnes of sugar. Considering that Brazil's grain and sugar crops are expected to be bumper this season, and the port of Santos, which is a major export port for raw sugar, is also a major export port for corn, soybeans and other crops, the market generally expects that there may be a port run during the peak stage of Brazil's sugar exports. At present, the pressure on Brazilian ports and road transport is highPreviously, the waiting days at Brazilian ports had risen to a high of 44 days, which is at an all-time high. According to the latest data released by Brazilian shipping agency Williams, the number of ships waiting to load sugar at Brazilian ports stood at 112 in the week ended Nov. 29, compared with 113 in the previous week. The amount of sugar awaiting shipment at the port is 537070,000 tons, compared to 516 the previous week420,000 tons. Of the total amount of sugar waiting to be exported during the week, the amount of high-grade raw sugar (VHP) was 517880,000 tons. The amount of sugar awaiting export at the port of Santos is 401230,000 tons, the amount of sugar waiting to be exported at the port of Paranagua is 101340,000 tons.
In the context of Brazil's abundant sugar production and blocked exports, the country may be facing inventory difficulties, and it is necessary to pay attention to the trade-off between high inventory in domestic sugar factories and high external demand. Brazil's bumper production this year has led to a year-on-year surge in inventories, and if sales are not sustained, there may be a possibility of inventory expansion. Sugar mills may face the possibility of selling to ** merchants at a lower price or switching to ethanol production;However, at the same time, considering that the price spread of raw sugar has remained high, and the discount of Brazilian raw sugar has recently recovered, the double reduction of production and exports in the northern hemisphere is unresolved, and we are concerned about the trade-off between high inventory and external demand for Brazilian sugar mills.
FourthInternational sugar market: India's output in late November has been at a high level in recent years, and the sugar yield is relatively good
Based on the continuous increase in the amount of ethanol used in sugar in India, the probability of exports in the new year has decreased. ISMA released a new round of production estimates for the 2024 season, and the 2023 24 sugar output is 33.7 million tons, down 2.48 million tons from the previous estimate and about 3 million tons less than the 2022 23 season. Since the new quarterly ethanol** has not yet been announced, the ISMA does not give an estimate of the ethanol diversion. Domestic consumption is expected at 27.85 million tonnes. Based on India's national policy of sugar ethanol, according to the assumption of 4 million tons of ethanol sugar in 2023 24, the sugar output in this crushing season is expected to be about 29.7 million tons. Given that India's sugar stocks are already at record lows, sugar exports may not be available this season if they choose to replenish stocks. Considering India's policy risks, India's exports need licensing quotas, and it is urgent that India has the need to limit domestic sugar prices and curb domestic inflation this year, even if there is exportable volume, the market may wait for India's exports to be exported, in other words, the probability of sugar exports in the first quarter has decreased.
India's recent bi-weekly report shows that Mabang produces 126750,000 tons, 161860,000 tons, sugar yield 783% compared to 8 last year85%；Uttar Pradesh produces sugar 1305. The squeeze is 14.42 million, and the sugar yield is 905% and 8 last year5%；Kabang produces 1.1 million sugars and 1294 squeezes10,000, the sugar yield is 8%, and the same period is 8%. The cumulative output in November was 4.32 million tons, although it fell 10 percent year-on-year7%, but this was mainly due to the delay in the start of the press in early NovemberIn late November, India's production was at a high level in recent years, and the sugar yield was also good, but it is worth noting that the sugar content in Mabang is still low. The overall data performance is bearish, and we will pay attention to the follow-up Indian production.
Analysis and outlook
In early November, the price of raw sugar hit 2814 cents pound to a new high. Then, although the raw sugar ** remains high, it is difficult to see a new high. In the context of the game between the long and short sides and the absence of new bullish factors in the international sugar market, the CONAB agency's larger-than-expected bumper yield estimate for Brazil this crushing season triggered the market's reassessment of the gap between supply and demand balance next year, stimulating the acceleration of the ICE raw sugar market. Close long positions, this week.
Fourth, on Friday, the two trading days of ice raw sugar ** plunged sharply**, to Friday's main March raw sugar ***095 cents, or 36%, and the settlement price was quoted at 25 per pound09 cents, hit a three-month low of 24 intraday95 cents, the contract fell 7% for the week. In addition, the main March contract of ice white sugar ** ***20$30, down 28%, and the settlement price was quoted at 696 per tonne$80, falling below the round figure mark of $700 per tonne.
At the beginning of December, the foreign sugar market broke down sharply, and the phased supply and demand pattern and expected mentality of the market weakened. On the supply side, the expected production cuts in India and Thailand have been reflected in the market, while Brazil's record sugar production and export volume "strong reality" put pressure on sugar prices and limited the upside of raw sugar prices. At present, the biggest support for international sugar prices is India's zero sugar exports in the new crushing season, but it will take a long time for the news to be falsified, and the price spread of raw white has been maintained above 130 US dollars and reached more than 140 US dollars this week, indicating that the demand side is strong. To sum up,Although the phased tight pattern of the first flow has not been alleviated, the current external sentiment is pessimistic, and it is necessary to wait for the release of emotions, and it is necessary to pay attention to the impact of the international sugar spot market on the disk in the short termIn the medium to long term, it is also necessary to pay attention to the extent of India's sugar production reduction, ethanol plans and export policies.