Market Update – September 2024

Centre South Brazil

The Brazilian crushing season which commenced in April has progressed at record pace as dry conditions have dominated CS Brazil for most of 2024. These conditions are a double-edged sword, on one hand prolonged dryness is aiding a very fast sugar cane harvest, crushing and export of sugar. However, on the other the hand the sugarcane crop has received well below average rainfall since January and yields are declining. Similarly, CS Brazil has been impacted by large fires recently which have burned through tens of thousands of hectares of standing cane.

Most analysts pegged 2024 Brazilian sugar production at approx. 42m+ tonnes in March this year. Due to the ongoing dryness most estimates are now down to around 40m tonnes with some falling below. Estimates continue to evolve as analysts try to understand the rate of yield decline and when Brazil will run out of cane. Dry conditions are forecast to continue across cane growing regions for the remainder of September.

MSF views the Brazilian weather situation as a bullish risk for sugar prices. Brazil has now crushed 422m tonnes of cane to the 1^st of September, this is roughly 70% of the crop assuming a total crop of 600m tonnes. It seems quite likely that cane estimates could reduce further over coming weeks and months as drought affected cane is harvested.

India

The previous Indian harvest concluded in May/June 2024, the next will commence shortly in October.

The monsoon season has been a good one with rains arriving in southern India slightly earlier than usual and spreading across the whole subcontinent in good time.

The Indian Meteorological Department reported on Monday that India has received 862.3mm of rain during the current monsoon season as of September 16, or 8% more than the comparable long-term average of 801.5mm. India's monsoon season runs from June through September.

There have been unofficial reports that the Indian government will not lift a ban on sugar exports in 2024 until the size of the next crop is better understood. This is positive for sugar prices however unofficial reports are subject to regular change. MSF's view is that the Indian government may consider allowing some sugar exports in Q2/Q3 2025 if the crop is above average in yield. To better manage excess cane and sugar production the Indian industry has recently seen massive expansion of ethanol distillation capacity. This is the preferred avenue for soaking up extra production rather than sugar exports which risk the ire of other sugar exporting nations and major Indian trade partners.

Thailand

Like India, Thailand has seen a very favourable wet season with above average rains across sugarcane growing areas. Not only have rains been good but area under cane increased in 2023 as sugarcane prices rallied in line with with global sugar prices.

The next Thai crop will likely commence harvest around November 2024 and is seen at 100 million tonnes of cane for 11.40 million tonnes of sugar production. This is compared to the previous season's 82m tonnes of cane and 8.75 million tonnes of sugar. Depending on actual results Thailand is expected to produce 2-3 million extra tonnes of sugar compared to 2023/24 season, this extra sugar would all be bound for the export markets.