October NY world sugar #11 (SBV21) on Thursday closed down -0.31 (-1.67%), and Oct London white sugar #5 (SWV21) closed down -7.10 (-1.55%).

Sugar prices on Thursday closed moderately lower, with NY sugar falling back from a 5-month high.  Sugar prices fell back Thursday on long liquidation sparked by speculation that an expected frost set to descend on Brazil will be less intense than originally feared, which diminishes the chances of further damage to Brazil's sugar-cane crops.  Paragon Global Markets on Wednesday said the cold front that is expected to move into the Minas Gerais region of Brazil Thursday night and Friday would be preceded by cloud cover, which could keep temperatures from falling below freezing and reduce the risk of frost developing.  

Sugar prices on Thursday initially moved higher, with NY sugar posting a new 5-month nearest-futures high, on fears that another frost could further damage Brazil's sugar cane crops.  Rural Clima said that frost might spread across southern Minas Gerais from July 29-30, increasing the chances of more frost damage occurring.

Sugar prices saw strength after Unica last Friday said the frost impact on Brazil's sugar-cane crop would be "big."  Companies were still assessing the damage from the first frost in late June before last week's frost again hit Brazil's sugar crops.  According to Rural Clima, parts of South Minas in Brazil recently saw the coldest temperatures in 27 years.

In another supportive factor for sugar prices, Wilmar International last Tuesday cut its Brazil 2021/22 Center-South cane output estimate to 510 MMT from April's forecast of 530 MMT, which would be the lowest sugar output in 10 years.  Wilmar also warned that Brazil's 2022/23 sugar cane crop might not recover due to this year's drought and frosts from this month that damaged cane plants.

Sugar prices have support from projections on June 4 from the International Sugar Organization (ISO) for the global 2021/22 sugar market to show a deficit of -2.7 MMT, a slight improvement from the -3.1 MMT global sugar deficit seen for 2020/21.  On May 25, Conab forecast that Brazil 2021/22 sugar production will fall -5.7% y/y to 38.9 MMT.  Conab also cut its Brazil 2020/21 sugar production estimate to 41.3 MMT from a Dec forecast of 41.8 MMT.

Unica reported Tuesday that Brazil’s Center-South sugar output fell -2.84% y/y in the first half of July to 2.944 MMT.
A surge in shipping contract rates by +37% this year, according to Xeneta, has curbed global demand for sugar amid a container shortage and is bearish for sugar demand and prices.

The outlook for ample sugar production from India is negative for sugar prices after India's Sugar Mills Association on July 14 said it projects India 2021/22 sugar production at 31 MMT, up slightly from 30.9 MMT expected in 2020/21.  India is the world's second-largest sugar producer.