Sugar Prices Fluctuate Amid Forecasts and Weather Impacts
Mixed Performance in Sugar Markets
March NY world sugar #11 (SBH25) closed down -0.11 (-0.55%) on Wednesday, while March London ICE white sugar #5 (SWH25) closed up +12.50 (+2.35%).
Sugar prices exhibited mixed results on Wednesday, with London sugar reaching its highest level in 1.5 weeks. New York sugar struggled after India announced a promising sugar crop forecast for the 2025/26 season, which is expected to increase sugar exports. Conversely, short covering by funds helped boost London sugar futures ahead of the March London sugar contract’s last trading day on Thursday.
Market Influences from Brazil and India
In recent weeks, the Brazilian real (^USDBRL) has strengthened, prompting fund short-covering and pushing sugar prices to an 8-week high last Thursday. The real remains just below a 3-month high, which has reduced export selling pressure from Brazilian sugar producers.
Support for sugar prices also came from a report last Tuesday indicating that India’s sugar production from October 1 to January 31 for the 2024/25 season decreased by -12.2% year-over-year to 16.5 million metric tons (MMT).
Global Production Forecasts Weighing Heavy
On the downside, projections from Green Pool Commodity Specialists forecast a global sugar surplus of +2.7 million metric tons (MMT) for the 2025/26 crop year, shifting from a deficit of -3.7 MMT in 2024/25.
Sugar prices have been decreasing for the past four months. Notably, on January 21, NY sugar hit a 5.75-month low, while London sugar dropped to a 3.5-year low. The improved global sugar supply outlook is a significant factor in the downward trend. The Indian government announced on January 20 that sugar mills would be allowed to export 1 million metric tons of sugar this season, easing the export restrictions imposed since October 2023, which were meant to preserve domestic reserves. In the previous year, India only permitted 6.1 MMT worth of exports, a sharp drop from the record 11.1 MMT.
Global Sugar Reserves and Thailand’s Impact
The International Sugar Organization (ISO) on November 21 reduced its 2024/25 global sugar deficit forecast to -2.51 MMT, improving from an earlier estimate of -3.58 MMT in August. Additionally, the ISO increased its global sugar surplus estimate for 2023/24 from 200,000 MT to 1.31 MMT.
Thailand’s potential sugar production increase adds pressure to sugar prices. On October 29, Thailand’s Office of the Cane and Sugar Board forecasted a +18% year-over-year jump in 2024/25 sugar production to 10.35 MMT, up from 8.77 MMT produced in the 2023/24 season. As the world’s third-largest sugar producer and the second-largest exporter, Thailand’s projections are influential.
Weather-Related Challenges for Brazil
Despite some support for sugar prices, Brazil faced challenges from drought and wildfires that affected sugar crops, particularly in its leading sugar-producing region of Sao Paulo. The industry group Orplana reported around 2,000 fire incidents that impacted up to 80,000 hectares of sugarcane land. Green Pool noted that as much as 5 MMT of sugarcane could have been lost. Consequently, Conab, Brazil’s crop forecasting agency, revised its 2024/25 sugar production estimate down from 46 MMT to 44 MMT due to lower yields.
India’s Production Outlook
India, the world’s second-largest sugar producer, is also expected to see output decline, adding support to sugar prices. The India Sugar Mills Association (ISMA) predicts a -15% drop in sugar production for the 2024/25 season, forecasting a low of 27.27 MMT.
Outlook for Global Sugar Consumption
The USDA’s bi-annual report released on November 21 projected that global sugar production for 2024/25 would rise +1.5% year-over-year to a record 186.619 MMT, with global consumption increasing +1.2% to a record 179.63 MMT. The USDA also expects a decline in global ending stocks by -6.1% year-over-year 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 are solely for informational purposes. For more information please view the Barchart Disclosure Policy
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