REPORTS

Brazil – UNICA should release the SH of April crop results in the coming days. The market is working with a cane crush value of 36mmt, about 5mmt more than the previous season. Sugar production is projected close to 2mmt, almost 2 times more than the same time of the previous crop. The ethanol sales is the number to watch as it can drive the sugar mix for the rest of the crop. According to ANP, hydrous demand in Mar/20 dropped by 16% y/y to 1.48 million cbm. The Ministry of Agriculture of Energy projected that demand for Ethanol would drop 49% in April while gasoline would decrease 35%. We should also highlight that weather has been quite dry in Brazil which is good for the crop evolution but might hamper the cane in the second half of 2020. Some regions of Brazil are also registering early low temperatures which could indicate potential frosts during the winter.

 

India –  According to MEIR Commodities, sugar exports have totalled 3.7mmt so far. The agency noted that the weak currency and good demand from Indonesia and Iran were encouraging exports. Out of the total, 60% went to Iran, Somalia, Malaysia, Sri Lanka and Afghanistan. Several producers are requesting the Government to increase the ethanol mandates. The biggest producing state (UP) has called on govt to increase ethanol blending in gasoline from 10% to 13%. India is likely to have a second consecutive year of high ending stocks despite the lower production, assuming the country  will produce more than 30mmt in the crop 20/21.

 

Thailand – Rainfall showed some improvement in the past week but Central and East regions are still showing low cumulative figures. A potential La Nina would bring plenty of rainfall over the country’s northern and eastern provinces in the May-Oct period.

 

US – The WASDE report will be released tomorrow and may bring news regarding the impact of COVID19 on US sugar consumption. Beet planting continues to progress; up to May 3^rd, we calculate close to 52% of the total crop acreage was planted, above last year’s 37% but below the historical average of 76%.

 

Mexico – Out of the 50 mills, 19 have ended the crop until May 2^nd. Cane crush is about 6mmt behind the past crop at 44mmt, while sugar output has reached 4.7mmt, about 934k less than the previous season. Recently mills have been improving low pol raw sugar production. Up to May 3^rd, Mexico exported 726k tonnes of sugar, of which 96% was to the US market.

 

EU – British Sugar ended the 2019/20 harvest in mid-April with the closure of the Newark plant, later than usual as rainy weather delayed operations. The four plants received 7.8mmt of beet, with an average yield of 78mt/ha (vs. the long term average of 75 ton/ha). In Italy, according to Co.Pro.b. Cooperative of growers, dry conditions and frosts affected the beet that was planted late. The beet area, is unchanged from the past year at at 28,500. So far, output is expected to be in line with last year. In Poland, the recent rainfall is expected to help the recently planted beet, after two months of dry conditions had hardened the soil.

 

Russia – Total sugar exports during 19/20 have reached close to 900k by end April.  According to IKAR, Russia exported record amounts of sugar in March and April this year thanks to cheap local prices and a weak Ruble but the pace could now start to slow as the Ruble strengthens and world prices are much lower. The Ministry of Agriculture suggests that total beet area will fall by 17.5% this year. The dry weather in the south and a strong export pace could help support prices. The Hydrometeorological Center of Russia warned that some regions were at risk of crop losses because of the lack of water, although the situation could still change with good precipitation in May.

 

Asia – Guangxi district in China crushed 45.8mmt of cane to make 6.0mmt of sugar in 2019/20, about 340k tonnes less than the previous year.  A Chinese analyst forecast that domestic prices will continue to be under pressure as the import duty is due to revert to 50% from May 22^nd onwards.  There are market rumours that the import quota may be reduced from 1.35mmt to 1mmt, but this might not stop imports given that world prices are much cheaper than domestic prices. Despite the lower prices, many sugar analysts expect local sugar demand could drop 1mmt due to the COVID.

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