March NY world sugar #11 (SBH25) today is down -0.24 (-1.23%), and March London ICE white sugar #5 (SWH25) is down -4.90 (-0.90%).
Sugar prices today are moderately lower as a rally in the dollar index to a 1-week high weighed on most commodity prices, including sugar. However, the real climbed to a 2-month high against the dollar, discouraging export sales from Brazil’s sugar producers.
Sugar found support after Czarnikow on Wednesday cut its Thailand 2024/25 sugar production estimate to 10.8 MMT from a previous forecast of 11.6 MMT.
An excessive short position by commodity funds in sugar futures could provide fuel for any short-covering rally. Last Friday’s weekly Commitment of Traders (COT) report showed funds increased their net-short NY sugar position by 33,828 in the week ending January 21 to a 5-year high of 139,873 net short positions. Also, funds increased their net-short London sugar position by 6,566 in the week ending January 21 to a 5-year high of 18,708 net short positions.
Last Tuesday, sugar prices extended their 4-month-long sell-off, with NY sugar posting a 5-1/4 month nearest-futures low and London sugar posting a 3-1/3 year low. An improving global sugar supply outlook is weighing on sugar prices. Last Monday, India said it would allow its sugar mills to export 1 MMT of sugar this season, easing its restrictions placed on sugar exports in 2023. India has restricted sugar exports since October 2023 to maintain adequate domestic supplies. India allowed mills to export only 6.1 MMT of sugar during the 2022/23 season to September 30 after allowing exports of a record 11.1 MMT in the previous season.
On November 21, the International Sugar Organization (ISO) reduced its 2024/25 global sugar deficit forecast to -2.51 MMT, compared to an August forecast of -3.58 MMT. ISO also raised its 2023/24 global sugar surplus estimate to 1.31 MMT from an August projection of 200,000 MT.
The outlook for higher sugar production in Thailand is bearish for sugar prices. On October 29, Thailand’s Office of the Cane and Sugar Board projected that Thailand’s 2024/25 sugar production would jump by +18% y/y to 10.35 MMT. Thailand produced 8.77 MMT of sugar in the 2023/24 season that ended in April. Thailand is the world’s third-largest sugar producer and the second-largest sugar exporter.
Sugar has support from signs of smaller sugar production in India, the world’s second-largest producer. The Indian Sugar and Bio-energy Manufacturers Association (ISM) reported on January 9 that India’s 2024/25 sugar production from October 1 to December 31 was down -15.5% y/y to 9.54 MMT. The ISM projects India’s 2024/25 sugar production to fall -15% y/y to a 5-year low of 27.27 MMT.
Drought and excessive heat last year caused fires in Brazil that damaged sugar crops in Brazil’s top sugar-producing state of Sao Paulo. Sugar cane industry group Orplana said that as many as 2,000 fire outbreaks affected up to 80,000 hectares of planted sugarcane in Sao Paulo. Green Pool Commodity Specialists noted that as much as 5 MMT of sugar cane may have been lost due to the fires. Conab, Brazil’s government crop forecasting agency, cut its 2024/25 Brazil sugar production estimate from November 21 to 44 MMT from a previous forecast of 46 MMT, citing lower sugarcane yields due to drought and excessive heat. Unica reported today that cumulative 2024/25 Center-South sugar output through mid-January is down -5.5% y/y to 39.794 MMT.
As a supportive factor for sugar prices, the ISO on August 30 forecasted 2024/25 global sugar production of 179.3 MMT, down -1.1% y/y from 181.3 MMT in 2023/24.
The USDA, in its bi-annual report released November 21, projected that global 2024/25 sugar production would climb +1.5% y/y to a record 186.619 MMT and that global 2024/25 human sugar consumption would increase +1.2% y/y to a record 179.63 MMT. The USDA also forecasted that 2024/25 global sugar ending stocks would decline -6.1% y/y 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
here.
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