Mu Tian Technology Sugar Network
Due to the lack of precipitation and port congestion in Brazil, the world's largest sugar exporter, it is currently in balance.PopularpowerballnumbersThe global sugar market faces supply risks due to reduced supply elasticity due to low inventory.
Against a backdrop of balanced supply and demand, the annual gathering of the sugar industry, New York Sugar week (New York Sugar Week), was held this week, with a series of seminars and industry dinners attracting participants from around the world.
Sugar prices, which have hovered around 19-20 cents a pound for weeks, fell sharply from around 28 cents a pound at the end of last year when unexpected good harvests in Brazil offset production cuts in India and Thailand.
The current price is not too bad for both sellers and buyers. Demand is good and production in key producing areas is recovering. However, experts speaking at this week's global industry event warned of a decline in the resilience of the market.
"Global sugar stocks remain tight," said Mauro Angelo, chief executive of Alvean, the world's largest sugar trader. "the global inventory / usage ratio is 37 per cent, the lowest level since 2010."
Jose Orive, chief executive of the International Sugar Organization (ISO), said: "the market will be subject to logistics in Brazil." The risk is that, in the absence of India's export market, loading tensions at Brazilian ports could repeat in 2023, with Brazil's share of global sugar exports rising from 70 per cent to 80 per cent.
Brazil and India together account for more than 40 per cent of global sugar production.
Marcelo de Andrade, managing director of soft commodities at Chinese trader COFCO International, also pointed out that weather is a risk factor.
"if there are any problems in India [the weather], it could have an explosive impact on the market."
In short, if all goes well, the market will remain stable, but any problem will trigger a price rise.
Over-reliance on the Brazilian supply market is seen as a major risk.
Tom McNeill, managing director of Green Pool Commodity Specialists, said the current hot and dry weather and port logistics are worrying.
Popularpowerballnumbers"any problem in Brazil could trigger a sharp reaction to prices," he said. "
COFCO's Andrade said his company had just suspended sugar cane cultivation in Brazil because of low soil moisture. The company operates four sugar factories in Brazil. "We need rain in May and June, otherwise the harvest will be even less," he said.
Brazil is currently experiencing a heat wave, with temperatures as high as 34 degrees Celsius in most of the central region and no rain. The weather forecast shows that there will be limited precipitation at the end of May.
McNeill said dry weather was boosting sugar cane crushing and sugar production in Brazil in the early stages of the harvest, which could mislead speculators to increase their short positions and drive down prices.
"there is considerable risk in the second half of the squeeze season," he said.
"unless we make a major mistake in our forecasts for Brazilian crops, there is no reason to keep sugar prices at 20 cents," said Alvean's Angelo.