Sugar Prices Slide as Global Market Shifts to Surplus by 2025
March NY world sugar #11 (SBH25) is down -0.01 (-0.05%), while March London ICE white sugar #5 (SWH25) has decreased by -1.60 (-0.30%).
Market Overview: Price Declines Follow Supply Predictions
Sugar prices dropped today after showing early gains. Green Pool Commodity Specialists forecast a global sugar surplus of +2.7 MMT for the 2025/26 crop year, a significant change from the predicted deficit of -3.7 MMT for 2024/25.
Focus on India: Production Cuts Boost Prices
Initially, sugar prices rose, reaching a one-month high for NY sugar and a seven-week high for London sugar. Factors such as reduced sugar production in India have played a crucial role. Centrum reported that India’s sugar production from October 1 to January 31 fell by -12.2% year-on-year, totaling 16.5 MMT. This reduction has helped support higher prices.
Impact of the Brazilian Economy on Sugar Prices
Support also came from the Brazilian real (^USDBRL), which gained strength, reaching a two-and-a-half-month high against the dollar. A stronger real discourages sugar exports from Brazil, thus providing additional support to prices.
Historical Context: Trends and Forecasts
Despite today’s brief rise, sugar prices have faced a four-month downtrend. NY sugar hit a five-and-a-half-month low on January 21, while London sugar dropped to a three-and-a-half-year low. The improving global sugar supply outlook, including India’s announcement to allow 1 MMT of sugar exports for the current season, has added downward pressure on prices. Last season, India’s exports were limited to only 6.1 MMT, significantly lower than the record 11.1 MMT in the previous year.
ISO Adjusts Forecasts: Global Market Outlook
On November 21, the International Sugar Organization (ISO) revised its forecast for the global 2024/25 sugar deficit to -2.51 MMT, improving from the August estimate of -3.58 MMT. Additionally, the ISO increased the global sugar surplus estimate for 2023/24 to 1.31 MMT from an earlier forecast of 200,000 MT.
Thailand’s Potential Increase: Supply Concerns Grow
The forecast for higher sugar production in Thailand may lead to further decreases in sugar prices. The Office of the Cane and Sugar Board recently projected an 18% increase in Thailand’s 2024/25 production to 10.35 MMT, following production of 8.77 MMT in the previous season. As the world’s third-largest sugar producer and second-largest exporter, Thailand’s output plays a significant role in the global market.
Challenges for Brazil: Crop Damage from Environmental Factors
Recently, sugar prices received some support after Czarnikow lowered its Thailand forecast. In Brazil, however, drought and heat waves have led to fires that damaged sugar crops. The Orplana group reported around 2,000 fire outbreaks affected up to 80,000 hectares in São Paulo, with Green Pool estimating a loss of up to 5 MMT of sugar cane. Similarly, Conab has cut its 2024/25 Brazilian production estimate to 44 MMT from an earlier 46 MMT due to expected lower yields.
Looking Ahead: India’s Production Decline and Global Trends
Support for sugar prices may come from India, as its production is projected to drop by -15% to a five-year low of 27.27 MMT. Conversely, the ISO projected global sugar production will be 179.3 MMT for 2024/25, reflecting a -1.1% decline from this year’s 181.3 MMT.
The USDA’s report on November 21 projected global sugar production to rise by +1.5% to a record 186.619 MMT in 2024/25, with consumption expected to increase by +1.2% to 179.63 MMT. The USDA also anticipates a -6.1% reduction in global 2024/25 sugar ending stocks to 45.427 MMT.
On the date of publication, Rich Asplund did not hold positions in any of the securities mentioned in this article. All information and data included are for informational purposes. For further details, please see the Barchart Disclosure Policy here.
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