May NY world sugar #11 (SBK22) on Friday closed down by -0.63 (-3.17%), and Aug London white sugar #5 (SWQ22) closed down by -10.60 (-1.96%). Sugar prices Friday sold off sharply to 3-week lows. Weakness in crude oil and the Brazilian real weighed on sugar prices Friday. Crude prices (CLM22) fell by more than -1% Friday, which undercuts ethanol prices and could prompt Brazil's sugar mills to divert more cane crushing to sugar production rather than ethanol, thus boosting sugar supplies. The Brazilian real (^USDBRL) tumbled to a 3-1/2 week low Friday against the dollar, which encourages export selling by Brazil's sugar producers. Another bearish factor for sugar was Friday's report from the USDA's FAS that projected Brazil 2022/23 sugar production would climb +2.9% y/y to 36.37 MMT and that 2022/23 Brazil sugar exports would increase by +3.7% y/y to 26.6 MMT. Sugar prices on Wednesday were undercut when Brazil's crop agency, Conab, raised its Brazil 2021/22 sugar production estimate to 35 MMT from a Nov estimate of 33.9 MMT. The outlook for larger sugar crop sizes in India and Thailand to offset reduced sugar production in Brazil is bearish for prices. Last Friday, the Indian Sugar Mills Association (ISMA) raised India's 2021/22 sugar production estimate to 35 MMT from 33.3 MMT, up +12.2% y/y, and said sugar exports would jump to a record 9 MMT. India is the world's second-largest sugar producer. Also, the Thailand Office of the Cane & Sugar Board reported on March 22 that Thailand's 2021/22 sugar production from Dec 7-Mar 19 was at 9.6 MMT, and the total Thailand 2021/222 sugar harvest Dec 7-Mar 31 may reach 10 MMT, a 3-year high. As a result, the Thailand Office of the Cane & Sugar Board expects Thailand to export 7 MMT of sugar this (2021/22) marketing year. Thailand is the world's second-largest sugar exporter. Sugar prices have support from the outlook for Brazil's sugar mills to produce less sugar this month. Covrig Analytics last Thursday said that Brazil's April sugar production could fall by -30% y/y to below 1.55 MMT as higher profitability of making ethanol relative to sugar prompts Brazil's sugar mills to divert as much as 70% of sugarcane to ethanol production. In a bullish factor, the International Sugar Organization (ISO) recently cut its global 2021/22 sugar deficit estimate to -1.93 MMT from a November estimate of -2.55 MMT. Reduced sugar output in Brazil is bullish for prices after Unica reported last Tuesday that 2021/22 Center-South sugar production for October through March was 32.064 MMT, down -16.6% y/y. Also, the sugar content in the sugarcane crushed fell by -1.3% y/y to 142.88 kg/ton from 144.71 kg/ton a year earlier. Big Picture Sugar Market Factors: World sugar production in 2021/22 (Oct/Sep) will climb +1% y/y to 170.510 MMT from 170.335 MMT in 2020/21 (ISO). The world sugar deficit in 2021/22 will shrink to a -1.93 MMT deficit from a -2.29 MMT deficit in 2020/21 (ISO). Sugar production by Brazil, the world's largest sugar producer, in 2020/21 (Apr/Mar) will climb by +32% y/y to 39.3 MMT from 29.8 MMT in 2019/20, as millers divert 46.4% of cane juice to produce sugar (up from 34.9% in 2019/20) (Conab). Sugar production from India, the world's second-largest sugar producer, will climb +13% y/y to 31 MMT in 2020/21 due to a good monsoon season (India Sugar Mills Association). Weather concerns in Brazil are a major bullish factor for sugar prices, with Brazil having experienced its worst drought in 100 years and as several bouts of frost in Brazil have damaged some sugar cane crops.