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By Marcelo Teixeira
NEW YORK, Feb 14 (Reuters) – Raw sugar prices SBc1 are forecast to recede toward the end of this year after touching a six-year peak early in February as production is expected to rise particularly in center-south Brazil, a Reuters poll of 11 traders and analysts showed on Tuesday.
Raw sugar futures on ICE exchange were seen ending 2023 at 18.50 cents per lb, down 12% from Monday’s close, according to the poll’s median forecast.
ICE white sugar prices LSUc1 were expected to end this year at $520 per tonne, down 7% from Monday’s close.
The poll consensus was for a global surplus of 4.2 million tonnes for the 2023/24 season (October to September), versus a surplus of 3.25 million tonnes expected in the current crop year.
“The main factor (in 2023) will be the size of the Brazilian crop, and how much of it can be exported in a timely manner due to competition with grains crop for logistics”, said independent analyst Claudiu Covrig.
Poll consensus is for a recovery of Brazil’s CS sugar output to 36.15 million tonnes in 2023/24 (April to March) versus 33.5 million tonnes so far in 2022/23 after positive weather and as mills allocate a large amount of cane to produce the sweetener, compared to ethanol, as current policies in Brazil are not favouring the biofuel.
The median forecast is for a sugar mix (cane allocation) of 46%, even higher than currently.
“The Petrobras pricing policy will be key,” said Czarnikow analyst Stephen Geldart, referring to the uncertainties regarding fuel pricing in Brazil under the new government.
With higher Brazilian production and an Indian crop that is seen stable, but at a high level, poll respondents expect a global surplus of 4.2 million tonnes in 2023/24 versus 3.25 previously.
A possible logistic chaos in Brazil is a factor that could change the common view of falling prices.
“They will struggle to export huge corn, soybean and sugar crops. Congestion in Santos and Paranagua could restrict the ability to load raw sugar at the peak levels the market may require,” said an European broker.
(Reporting by Marcelo Teixeira; Editing by Josie Kao)
((marcelo.teixeira@tr.com; +1 332 220 8062; Reuters Messaging: marcelo.teixeira.thomsonreuters.com@reuters.net – https://twitter.com/tx_marcelo))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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