Market Update – May 2023

The spot value of sugar in Australian dollars per tonne skyrocketed more than 30% through March and April 2023 after a combination of bullish fundamental developments combined to drive sugar to an 11-year high whilst the AUD/USD exchange rate remained subdued below 0.68. The March/April rally was spurred on by several key events:

  1. Rain in Brazil delayed commencement of harvesting from March until April. April was wetter than average which reduced cane crushing and sugar production.
  2. The market needs sugar exports from Brazil of around 2.50m tonnes per month in 2023 to supply global consumers after India and Thailand produced less sugar than forecast. In April there was growing doubt this could be achieved as Brazilian ports are expected to be more congested than usual as large grain crops are also funneled through major ports.
  3. US meteorologists significantly increased their confidence that an El Nino event will unfold in the next couple of months as opposed to later in the year. El Nino generally brings dry weather to Australia, Thailand and India whilst producing wetter conditions for Brazil. El Nino has the potential to reduce global sugar production.

Centre South Brazil

Rainfall from January through to the end of April 2023 was above average which resulted in good cane growth and a large crop forecast for 2023 season around 595 million tonnes of cane. Given the strength of sugar prices relative to ethanol, Brazilian millers will maximise sugar production in 2023. There is some debate about how much sugarcane can be diverted for sugar production with the market largely expecting about 44%-47% of cane will be used to produce sugar (many mills are set up only for ethanol production). However, it remains possible that more than 47% could be used for sugar production. Given strong recent sugar prices it seems logical that some mills may have invested in extra sugar production capacity.

Whilst good for crop growth, the wet conditions delayed harvest commencement from March until April which supercharged the March/April rally in sugar prices. Through this period the spot value of sugar moved from below $700 per tonne to just shy of $900 per tonne in Aussie dollar terms. Prices were already on the rise prior to this event due to reduced sugar output from Thailand and India in early 2023.

Rain in Centre South Brazil continued through April which meant a significant number of days were lost. Brazilian sugar output for April was therefore below long-term average. Conditions have improved in May with very little lost time for rain so far this month.  UNICA is due to release Brazilian crushing results for the first half of May this week which are expected to be very good with perhaps 40m+ tonnes of cane milled for the two-week period; this compares to less than 35m tonnes milled for the same period in 2023. Better than expected results could prompt some sugar price weakness.

El Nino is now a high chance of developing between May and November 2023 according to US meteorologists. Typically, El Nino produces wet conditions for CS Brazil which, if the case, would interrupt harvesting and delay sugar exports. This would be positive for sugar prices. Logistically Brazil is expected to face challenges in 2023 as record grain crops are funneled through the same export ports as sugar, potentially leading to bottlenecks and long delays to load sugar vessels. The market expects Brazil to export at least 2.50 million tonnes of sugar per month from May onwards which may not be possible due to logistical constraints. Any delays to exports will be positive for sugar prices.


The recent Indian crush which commenced in October 2022 (only a small handful of mills are still crushing), is expected to produce around 32.80 million tonnes of sugar for the season. This is 3.20 million tonnes less than initial forecast completed in late 2022. There are multiple reasons the crop disappointed:

  1. Initial forecasts for dryland growing areas in Maharashtra and Karnataka were overstated. Whilst the wet season (June-Sep) delivered average rainfall for these areas the rain was concentrated in August and September with June and July too dry.
  2. More sugar was diverted for ethanol production as the Indian government continues to push its ethanol mandate designed to improve air quality and health in major cities.
  3. Reduced plantings of cane in Maharashtra during 2021 meant ratoon age was higher than usual.

The Indian government approved export quota for only 6 million tonnes in late 2022 with expectations at that time that they would approve a further 2-3 million tonnes quota in March or April 2023 once the crop had proven itself. The crop did not prove itself which meant the government has not allowed further exports, adding to the bullish sugar market.

India is now in its intercrop period with the monsoon forecast to arrive on the 4th June to southern parts of India. The Indian Meteorological department has forecast an average wet season which, if the case, would produce enough cane to see India export 4-5 million tonnes of sugar from next season. If rainfall disappoints for southern dryland growing states of Maharashtra and Karnataka this export quota would be slashed or exports scrapped altogether to ensure domestic supply.


Thailand commenced harvesting its most recent crop in late November 2022. Initial cane estimates were for 110+ million tonnes. The final result was 94 million tonnes of cane which meant an actual sugar production drop of 1.3 million tonnes compared to forecast. The drop would have been more severe if not for record CCS results for the country.

Thailand is also now in its intercrop period with a dry March and April and a recent heatwave already in the books. May has delivered much needed rainfall to some areas however more will be necessary through the wet season. El Nino poses a risk to Thai production with dry conditions associated with the weather phenomenom.

At this early stage the next Thai cane crop is pegged somewhere in the 80-90 million tonne range. Lower forecast sugar production and exports are positive for global sugar prices.


Sugarcane crushing in southern China finished in early May. Total sugar production is believed to be around 9 million tonnes which is 1m tonnes lower than initial forecast and is the second worst result of the past 15 years. Drought, competition from other crops (cassava) and urban development are to blame for recent annual reductions in output.

China’s annual sugar consumption is estimated around 16 million tonnes which means there is a 7m tonne gap between supply and demand. Most of this gap will be filled by imports, in 2022 China imported 5.275m tonnes of raw and white sugar, second only to Indonesia which imported 6m tonnes.

The Chinese government maintains strategic reserves of sugar which they are likely to be already drawing down to reduce the need for costly imports in 2023. This only kicks the can down the road with reserves needing to be replenished in 2024 or 2025. The domestic value of sugar in China is around US1,000 per tonne. At these levels smuggling becomes more prevalent.


European sugar production in 2022/23 season was down to around 14.25 million tonnes which is below the 10-year average despite very high sugar beet prices. The outlook for 2023/24 crop is slightly lower with only marginal increases in planted areas due to a wet spring planting period and the EU’s banning of neonic-treated beet seeds which dramatically increases the risk of beet yellow virus.