In the same week that ISMA updated India’s crush figures for the first half of May, a strong tropical cyclone called Amphan was formed. This cyclone with winds between 200 and 260 km/hour is equivalent to a category 5 hurricane, which is very strong. However, the projection models for the cyclone path developed by both Accuweather and NOAA indicate that the landfall is likely to occur more in Bangladesh than in northern India, despite the fact that the entire system originated from and developed in the coast of India. In the north of the country, there are some cane-producing regions, and this fact must be included in the clipping of news on the sugar sector over the next few weeks.
In this context, not only the landfall must be the important point for market analysis, but also indications of impacts on Indian cane fields. But as it must develop along the coast and enter the Asian continent from northern India, on the border with Bangladesh, few cane fields will be directly affected. Even so, strong winds and heavy rainfall from this system are expected to hit the entire eastern coast of India, which can be used as a basis for indications of possible damage to cane fields. If this really occurs, the July 2020 contract in New York may find a real space to move towards the level of 12.00 cents only due to the speculation of possible damages. After that, the government and ISMA must issue reports on the data that actually occurred.
On the production side, SAFRAS & Mercado notes that the accumulated volume reaches 26.4 million tons in the first half of May, with 65 mills in operation, against 38 at the same time last year. As a result, the probability of the total supply of the season reaching 27 million tons is still high at the end of May and will reach 28 in June with the residual production of the current crop (2019/20). However, the incidence of tropical cyclone Amphan may stop the activities of some mills near the country’s west coast on the northern border.
SAFRAS & Mercado expects the Indian sugar supply at the end of the 2019/21 season (ending in October) to be at nearly 29 million tons. USDA projects 29.3 million, while the ISMA points to 26.50 million. In turn, the National Federation of Cooperative Sugar Factories Ltd indicates a supply of 26.30 million, while the Ministry of Agriculture of India points to 27.30 million, after spending most of the year indicating a gap between 28 and 29 million tons. Dutch Rabobank expects India’s supply at 28.90 million tons, while the All India Sugar Trade Association (AISTA) estimates 27.50 million.
Looking at the most recent data, during the first half of May, India produced 664 thousand tons of sugar, down 34.97% from 1.02 million tons produced in the immediately previous fortnight. In the annual comparison, we can observe an increase of 48.21% over 448 thousand tons produced during the same period last year.
Compared with the 3-year average for the same reference period, we can observe a 19.42% increase over the current production volume. The 3-year average itself decreased by 44.87% in the margin, going from 1.00 million to 556 thousand tons. India indicated the shipment of 4.20 million tons of sugar. This volume shows that 70.00% of the country’s subsidized export target is already completed, assuming that this target must be 6 million tons as the government still indicates, but that it is discredited by local agents who point to more realistic volumes of 4 to 5 million.
The fall of 34.97% YoY of the first half of May is in line with the annual decrease seen in the immediately previous fortnight, when, until then, the volume produced was 32.20% below the same moment of the previous year. Since the beginning of the year, the average decline of volumes in annual terms has fluctuated around 7.81%, while from the perspective of the 3-year average, decreases have generally fluctuated around the level of 6.97%.
In the accumulated volume of the crop, India already presents a supply of 26.46 million tons, down 18.87% from 32.61 million tons produced in the accumulated volume of the crop until the same moment of the previous year. In this context, the volume produced in the first half of May, of 664 thousand tons, was 69.89% below the average production of the current crop, which is currently at 2.20 million tons. The crop’s average production itself fell by 5.97%, changing from 2.47 million tons to the current level of 2.20 million tons.