The initial 2024 season sugar price forecasts from marketing companies indicate that the high physical premiums received by Australian sugar in the 2023 season, are likely to be repeated for this production season.
For Wilmar growers who use Target Pricing, the initial forecast is for $38.43/t Actual to be added to the AUD #11 swap price fixed by the grower. This is in comparison to QSL’s forecast of $21.12/t Actual.
While the initial forecast is below the 2023 season estimate of $53.22/t Actual (QSL $33.91/t Actual), it is important to remember that not long ago this premium was negligible to negative.
This is good news for growers and underscores the strong demand for the quality sugar that is consistently produced out of Australia.
An expected bounce back in the Thai crop, which is the main competitor in Asia for our sugar, may keep a lid on upside revisions from here.
As far as the broader market is concerned, the focus remains on the progress of the Brazilian crop. The ICE #11 continues to trade around 20c/lb as the market continues to digest the volume, ATR, and production mix from the early Brazilian crush.
The May 24 UNICA fortnightly reports indicate that all three sugar production key variables were trailing behind market expectation: tonnes are down, sucrose yield is lower and sugar make is below 50 per cent.
The trend through June was for the crop, yield, and sugar make to firm up. Nevertheless, the speculative community has reduced their short position, and upside resistance will depend on how the rest of the world crop is developing.
As previously noted, the Thai crop is expected to be recovering well this year and the monsoon in India appears to be on track for a normal season. Even if the Indian crop comes in higher, the increased production is expected to be absorbed into ethanol production and therefore, global sugar stocks will not be affected.
Wilmar’s Senior Sugar Trader Peter Bingham will be touring Queensland in the second week of July. He will be presenting in each of our regions, providing an update on Wilmar’s supply and demand forecasts, as well as an insight into the key destination countries for Australian sugar.
This is always a popular event, so make sure you contact your local consultant for further information.
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