Equity Analysis /

Thailand: Agro & Food - Sugar: A hefty slash in 2022/23 global sugar stocks

  • USDA’s Nov report—a modest YoY rise in 2022/23 production …

  • … but a YoY drop in global stocks—positive for sugar price

  • Stronger momentum of global sugar price in recent months

Bualuang Securities
8 December 2022

We regard USDA’s Nov semi-annual sugar report as positive due to the slashing of global sugar stocks led by India while global sugar production has inched up only slightly from its previous forecast. We still foresee a high range of global sugar price of 18-20 cents/lb in 2023 and reiterate our TRADING BUY call on KSL.

USDA’s Nov report—a modest YoY rise in 2022/23 production …

In its Nov 22 semi-annual Sugar: World Markets and Trade report, USDA revised up its 2022/23 global sugar output forecast by a mere 0.1% from its previous May 2022 report (to 183.2m tonnes), led by an upgrade in Brazil (by 1.7m tonnes) outweighing the downgrade in Europe, Mexico, Australia, South Africa, Pakistan, Philippines and Vietnam (each country down by 0.11-0.16m from previous forecasts). In other words, it represented a 1.6% YoY rise, mainly from Brazil (up 2.6m YoY), Russia (up 0.5m), China (up 0.4m) and Thailand (up 0.3m). The YoY rise in Brazilian sugar output is due to the favorable rainfall boosting yields with the same 45:55 sugar/ethanol production mix, while the YoY rise in Thailand is led by the above-average precipitation during Jan-Aug 2022. The YoY fall in India is thanks to lower sugar yields from the erratic and uneven 2022 monsoon. The YoY fall in Europe is due to the reduced sugarbeet plantings in favor of more profitable corn and sunflower crops.