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Rice and Sugar Futures: What’s Happening?


A decline in supply as well as projections of increasing demand from China is evident. European nations saw rice futures rise beyond $18 per hundredweight. Reaching their highest levels since June 2020. Following a downward revision to the yield estimate, the USDA has reduced its expectation for US rice production in 2022 to 164.3 million hundredweight, roughly a million less than in October’s report.

Additionally, due to lower beginning stocks for India. Also lower output in Pakistan, Bangladesh, Nigeria, and Sri Lanka. The total amount of supplies decreased by 2.5 million tons to 686.8 million. In addition, prices of rice exported from India grew somewhat in November. This is due to tight supply for exporters and aggressive government purchases of paddy to promote increased domestic output. In Bangladesh, a neighboring country, rice prices have also remained high despite recent government efforts to stabilize the market, such as admitting imports and lowering duties.

The price of sugar has increased by 22% since last May, according to wholesale figures. Global sugar production has fallen short of expectations. India is undoubtedly a significant producer. Due to the crop’s vulnerability to dry weather, its sugar output has fallen short of expectations. Because the actual output was significantly lower than expected, poor forecasting is also to blame.

The performance of sugar mills has improved as a result of rising sugar prices. It is shown in their March quarter results. This is expected to continue as long as sugar prices remain favorable. Their shares have increased in anticipation of this. Shares of Balrampur Chini Mills Ltd have increased by 62% over the past six months. Those of Bajaj Hindustan Sugar Ltd have increased by 28%. Those of Shree Renuka Sugars Ltd have increased by 39%.

As a result of the decline in crude oil prices, producers were forced to raise the crush of sugar, and sugar futures on the ICE fell to below 19.3 cents per pound, retreating even more from the seven-month high of 20.3 cents reached on November 15th.

However, despite the reduction in the export quota for the 2022–2023 marketing year, prices are still almost 7% higher than they were at the beginning of the month in India, a significant producer of sugar.

Up until May 2023, the nation will issue export licenses for 6 million tons of sugar, or just under half of the previous year’s limit.

Amid the potential that President-elect Lula would remove the nation’s fuel price cap in January, further bolstering prices, investors continued to evaluate supply predictions for top supplier Brazil.

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