Today, July NY world sugar #11 (SBN25) is down -0.09 (-0.52%), while August London ICE white sugar #5 (SWQ25) is up +0.80 (+0.16%). Sugar prices show mixed signals, with July NY sugar hitting a 2-1/2 month low and K25 futures plunging to a 3-3/4 year low. Expectations for increased sugar production in Brazil are pressuring prices.

On Wednesday, Unica reported that Brazil’s Center-South sugar production for the first half of April increased by +1.3% year-over-year to 731,000 MT. This report marks the first update for the 2025/26 season. Tuesday’s forecast from Conab estimated Brazil’s 2025/26 sugar production could rise by +4.0% year-over-year to 45.875 MMT.

Bloomberg noted that Louis Dreyfus was the sole trader to deliver raw sugar for settling NY May sugar futures, indicative of weak demand. However, prices recovered slightly today, buoyed by India’s Food Secretary Chopra’s statement that the country’s 2024/25 sugar exports may only reach 800,000 MT, below earlier anticipations of 1 million MT.

In recent weeks, sugar prices have faced downward pressure due to signals of larger global output. Last Wednesday, the USDA’s Foreign Agricultural Service (FAS) projected Brazil’s 2025/26 sugar production would increase by +2.3% year-over-year to 44.7 MMT, up from 43.7 MMT in the prior season. Additionally, India’s monsoon season, expected to bring abundant rain, is likely to foster a significant sugar crop. The Indian Ministry of Earth Sciences projected total rainfall to hit 105% of the long-term average this year, with the monsoon stretching from June through September.

On the downside, a March 12 projection from consultant Datagro suggested that Brazil’s Center-South sugar production for 2025/26 could climb by +6% year-over-year to 42.4 MMT. Moreover, Green Pool Commodity Specialists forecast a shift in the worldwide sugar market to a surplus of +2.7 MMT for the 2025/26 crop year, compared to an estimated deficit of -3.7 MMT in 2024/25.

Additionally, the Indian government announced on January 20 that sugar mills would be permitted to export 1 MMT of sugar this season, easing prior restrictions. Since October 2023, India has limited sugar exports to ensure sufficient domestic supplies. During the 2022/23 season, exports were restricted to only 6.1 MMT, a stark contrast to the record 11.1 MMT allowed the previous season. However, the ISMA projects a -17.5% year-over-year decline in India’s 2024/25 sugar production, predicting it will drop to a five-year low of 26.4 MMT.

Similarly, the prospects for higher sugar production in Thailand add to the bearish outlook for prices. Thailand’s Office of the Cane and Sugar Board announced a projected +14% year-over-year rise in 2024/25 sugar production to 10.00 MMT. Thailand stands as the world’s third-largest sugar producer and the second-largest exporter.

Despite this bearish trend, support for sugar prices came from a report by the Indian Sugar and Bio-Energy Manufacturers Association (ISMA) on April 17, indicating that India’s sugar production from October 1 to April 15 was 25.5 MMT, down -18% from the same timeframe last year.

Signs of reduced global sugar production remain supportive for sugar prices. Unica reported on April 14 that cumulative sugar output in Brazil’s Center-South region for 2024/25 through March fell by 5.3% year-over-year to 40.169 MMT. Further, on March 12, ISMA downgraded its 2024/25 Indian sugar production forecast to 26.4 MMT from January’s estimate of 27.27 MMT due to lower cane yields.

The International Sugar Organization (ISO) also heightened its global sugar deficit forecast for 2024/25 to -4.88 MMT from an earlier prediction of -2.51 MMT, indicating a tightening market as compared to the 2023/24 global sugar surplus of 1.31 MMT. Additionally, the ISO cut its global sugar production forecast for 2024/25 to 175.5 MMT from a previous estimate of 179.1 MMT.

Last year’s drought and extreme heat caused significant damage to sugar crops in Brazil’s primary production area, São Paulo. Green Pool Commodity Specialists noted that around 5 MMT of sugar cane might have been lost due to these conditions. On Thursday, Conab projected that Brazil’s 2024/25 sugar production would decrease -3.4% year-over-year to 44.118 MMT, attributing this decline to lower sugarcane yields prompted by drought and heat.

The USDA’s bi-annual report released on November 21 predicted global 2024/25 sugar production to rise by +1.5% year-over-year to a record 186.619 MMT, while global consumption is expected to grow by +1.2% to a record 179.63 MMT. The USDA also forecasted that global ending stocks for 2024/25 would dip -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 here.

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