Global Sugar Prices Dip as Market Adjusts to Shifting Supply Projections

Strong Dollar and Changing Production Forecasts Drive Recent Declines

March NY world sugar #11 (SBH25) is experiencing a decrease today, down -0.13 (-0.66%), while March London ICE white sugar #5 (SWH25) fell -4.30 (-0.82%).

Today’s sugar prices are lower, impacted by a stronger U.S. dollar. Additionally, a report from Green Pool Commodity Specialists indicated that the global sugar market is expected to shift to a surplus of +2.7 million metric tons (MMT) in the 2025/26 crop year, reversing the -3.7 MMT deficit projected for 2024/25.

The Brazilian real (^USDBRL) has strengthened over the past two weeks, leading to fund short-covering in sugar. Prices surged to a 7-week high last Thursday as the real reached a 2-3/4 month peak against the dollar, making export sales less appealing for Brazil’s sugar producers.

Support for sugar prices emerged earlier this week when Centrum reported a 12.2% year-over-year decline in India’s sugar production, with estimates of 16.5 MMT from October 1 to January 31.

Despite this, sugar prices have continued to trend downward for four months. On January 21, NY sugar hit its lowest mark in 5-1/2 months, while London sugar saw a 3-1/2 year low. The improving outlook for global sugar supplies is contributing to this downward pressure. For example, India announced plans to allow the export of 1 MMT of sugar this season, reducing prior restrictions that have been in place since October 2023 to maintain domestic availability. In contrast, only 6.1 MMT were permitted for export during the 2022/23 season following a record-high of 11.1 MMT the prior year.

On November 21, the International Sugar Organization (ISO) revised its earlier forecasts for global sugar deficits. They lowered the estimate for 2024/25 from -3.58 MMT to -2.51 MMT, while simultaneously increasing the global sugar surplus estimate for 2023/24 from 200,000 metric tons to 1.31 MMT.

The anticipated increase in sugar production in Thailand is another bearish signal for sugar prices. On October 29, Thailand’s Office of the Cane and Sugar Board projected a +18% year-over-year rise to 10.35 MMT for the 2024/25 crop year, coming off of 8.77 MMT produced in the 2023/24 season. Thailand is noted as the world’s third-largest sugar producer and second-largest exporter.

Additional support for sugar prices was noted last Wednesday when Czarnikow revised its sugar production estimate for Thailand down to 10.8 MMT from a previous forecast of 11.6 MMT.

Brazil’s sugar production outlook was affected by last year’s drought and heat, which led to fires in the leading sugar-producing state of São Paulo. The sugar cane industry group Orplana reported around 2,000 fire incidents that impacted 80,000 hectares of planted sugarcane. Green Pool estimated that as much as 5 MMT of sugar cane could have been lost. Consequently, Conab, Brazil’s crop forecasting agency, reduced its sugar production estimate for 2024/25 to 44 MMT from a former projection of 46 MMT due to lower yields.

India’s declining sugar production lends further support to prices, with projections indicating a -15% year-over-year drop to a 5-year low of 27.27 MMT for the 2024/25 season.

In a positive development for sugar prices, the ISO forecasted on August 30 a 2024/25 global sugar production of 179.3 MMT, reflecting a slight decline of -1.1% from 181.3 MMT in 2023/24.

Furthermore, the USDA’s bi-annual report released on November 21 projected a +1.5% year-over-year increase in global sugar production, estimating a record-high of 186.619 MMT for 2024/25. It also predicts a +1.2% rise in human sugar consumption, reaching 179.63 MMT, while forecasting a -6.1% decrease in global sugar ending stocks 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.

More news from Barchart

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.