Sugar Prices Slide Amid Supply Changes and Global Economic Factors
Pricing Trends in New York and London Reflect Market Pressure
March NY world sugar #11 (SBH25) Monday closed down -0.01 (-0.05%), while March London ICE white sugar #5 (SWH25) remained unchanged.
Sugar prices faced continued downward pressure on Monday, marking a two-week decline. New York sugar hit a 2-1/2 month low, while London sugar reached a 3-week low. The Brazilian real (^USDBRL) weakened, falling -1.61% against the dollar, which contributed to the selling of sugar exports by producers in Brazil.
Global Sugar Supply Outlook Dims Prices
A revised forecast from the International Sugar Organization (ISO) added to the bearish sentiment. On November 21, the ISO lowered its 2024/25 global sugar deficit estimate to -2.51 MMT, previously projected at -3.58 MMT in August. Meanwhile, the 2023/24 global sugar surplus is now expected to grow to 1.31 MMT, up from +200,000 MT in the last forecast.
Brazil’s Production Decline vs. Global Prospects
Contrasting this are reports of declining sugar production in Brazil’s Center-South region. Unica disclosed a significant drop in output, down -59.2% year-on-year to 898 MT in the first half of November. Cumulative production for 2024/25 in this region is also down -3.0% compared to last year, standing at 38.274 MMT.
This decline can be attributed to drought and excessive heat, which led to devastating fires in São Paulo, Brazil’s primary sugar-producing state. Industry group Orplana reported that around 2,000 fires affected up to 80,000 hectares of sugarcane. According to Green Pool Commodity Specialists, about 5 MMT of sugar cane may have been lost due to these incidents. Consequently, Brazil’s government crop agency Conab revised its 2024/25 sugar production estimate down to 44 MMT from 46 MMT.
Potential Overproduction Threatens Price Stability
In a potentially bearish turn, Thailand’s sugar production is forecasted to rise. As of October 29, the country’s Office of the Cane and Sugar Board projected a +18% increase for the 2024/25 season, reaching 10.35 MMT, up from 8.77 MMT in the previous season. Thailand ranks as the world’s third-largest sugar producer and the second-largest exporter.
India’s Policies Provide a Silver Lining
India, on the other hand, may offer some support for sugar prices. The Indian Food Ministry removed restrictions on sugar mills that produced ethanol for the current 2024/25 year, allowing for potential export control. India had previously curtailed sugar exports to stabilize domestic supplies, allowing only 6.1 MMT in the 2022/23 season, down from a record 11.1 MMT.
The Indian Sugar and Bio-energy Manufacturers Association (ISM) reported a -1.6% drop in sugar production for 2023/24, totaling 31.4 MMT. Looking ahead, the ISM predicts a -2% decrease for 2024/25, estimating production at 33.3 MMT. Additionally, India’s sugar reserves were revised down to 8.4 MMT as of September 30, from an earlier estimate of 9.1 MMT.
Global Production Trends and USDA Insight
Globally, the ISO has projected a minor dip in 2024/25 sugar production, estimating 179.3 MMT, which translates to a -1.1% decrease from 181.3 MMT in 2023/24. The USDA’s latest bi-annual report, released November 21, contradicts this with a forecast of increased global production to a record 186.619 MMT for 2024/25, alongside a predicted +1.2% rise in human consumption to 179.63 MMT. Ending stocks are expected to reduce by -6.1% to 45.427 MMT.
On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
