NEW YORK, Dec 8 (Reuters) – Raw sugar prices on ICE will be in a range of 18 to 20 cents per pound in 2022, broker StoneX estimated on Wednesday, saying larger production from key countries and a less urgent demand would limit the upside.
Despite projecting a third consecutive global supply deficit in the 2021/22 season, which runs from October to September, at 1.8 million tonnes, the brokerage said during an outlook seminar organized by Sugaronline that higher production in India, Europe and Thailand, and a better outlook for the new Brazilian season, would cap prices.
The expectation that energy prices will remain high next year, however, should provide support at a price of 18 cents per pound, a level at which Brazilian mills could start shifting part of the cane crop to produce more ethanol and less sugar.
Bruno Lima, head of sugar and ethanol at StoneX, expects the market to remain locked next year between Indian sugar exports, which would limit the upside, and Brazilian ethanol sales, which would prevent a fall below 18 cents.
“Many people think India would come to the export market with prices around 21 cents. We think they would export at lower (prices) than that,” Lima said, adding that the success of the crop in the Asian nation is pressuring domestic sugar prices.
The analyst also said Brazil’s centre-south region will likely have better production in 2022/23 than initially expected. StoneX sees sugarcane outputin that region recovering to around 565 million tonnes, from 530 million tonnes in 2021/22.
“The rains have improved soil moisture a lot,” he said, referring to conditions in the centre-south region, which suffered from a harsh drought in mid-2021.
(Reporting by Marcelo Teixeira Editing by Paul Simao)
(([email protected]; +1 332 220 8062; Reuters Messaging: [email protected] – 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.
www.nasdaq.com