Sugar Prices Drop Amid Expectations of Increased Global Supply
On Wednesday, July NY world sugar #11 (SBN25) closed at -0.31 (-1.78%), while August London ICE white sugar #5 (SWQ25) fell to -8.40 (-1.70%).
Market Overview
Sugar prices experienced moderate losses, with London sugar hitting a 3-1/2 month low due to forecasts of larger global sugar supplies.
Brazil’s Production Forecasts
Last Friday, July NY sugar reached a 3-3/4 year low as Brazil is expected to increase sugar production. Unica reported a 1.3% year-over-year rise in Brazil’s Center-South sugar production for the first half of April, totaling 731,000 metric tons. This marks Unica’s first report for the 2025/26 season. Additionally, Conab projects a 4.0% year-over-year increase in Brazil’s 2025/26 sugar production, estimating it at 45.875 million metric tons.
Brazilian Real and Export Sales
The Brazilian real (^USDBRL) is also impacting sugar prices. On Wednesday, the real fell to a 2-week low against the dollar, prompting increased export sales from Brazil’s sugar producers.
Global Sugar Production Insights
On Tuesday, the USDA’s Foreign Agricultural Service (FAS) projected that India’s 2025/26 sugar production would increase by 26% year-over-year to 35 million metric tons, attributing this rise to favorable monsoon conditions and expanded sugar acreage. Earlier in April, the USDA’s FAS predicted Brazil’s sugar output for the same period would rise 2.3% year-over-year, from 43.7 million metric tons to 44.7 million metric tons.
Moreover, an anticipated bumper crop in India, fueled by an expected 105% of the long-term average rainfall during the monsoon season from June to September, is expected to further dampen sugar prices.
India’s Export Restrictions
In a bearish turn, the Indian government announced on January 20 that it would permit sugar mills to export 1 million metric tons this season, easing restrictions that have been in place since October 2023. In the previous season, India exported only 6.1 million metric tons, down from a record 11.1 million metric tons. However, the Indian Sugar Mills Association (ISMA) has projected a 17.5% year-over-year decline in India’s 2024/25 sugar production to a five-year low of 26.4 million metric tons. Recent reports indicate that from October 1 to April 15, India’s sugar production fell 18% compared to the previous year.
Thailand’s Sugar Production
On the bearish front, Thailand’s Office of the Cane and Sugar Board reported a 14% year-over-year increase in sugar production for 2024/25, reaching 10 million metric tons. As the world’s third-largest sugar producer, Thailand’s output can influence global prices.
Global Sugar Deficit Projections
Conversely, signs of reduced global sugar production support price stabilization. Unica reported a 5.3% year-over-year decline in Brazil’s Center-South sugar output through March, bringing the total to 40.169 million metric tons. Consistent with this trend, ISMA has lowered its 2024/25 sugar production forecast for India due to reduced cane yields.
The International Sugar Organization (ISO) has recently raised its global sugar deficit forecast for 2024/25 to 4.88 million metric tons, up from a previous forecast of 2.51 million metric tons. Furthermore, the ISO has cut its global sugar production forecast to 175.5 million metric tons from 179.1 million metric tons.
Impact of Drought and Heat on Brazil’s Sugar Production
Fires fueled by drought and extreme heat last year caused significant damage to sugar crops in Brazil’s top-producing state of Sao Paulo, with Green Pool Commodity Specialists estimating a loss of 5 million metric tons of sugar cane. Last Thursday, Conab projected a 3.4% year-over-year decrease in Brazil’s sugar production for 2024/25 to 44.118 million metric tons, citing lower cane yields as a result of adverse weather conditions.
USDA Projections for Global Sugar Supply
The USDA’s bi-annual report, released on November 21, forecasts global sugar production for 2024/25 to rise by 1.5% year-over-year, reaching a record 186.619 million metric tons. It also anticipates a 1.2% year-over-year increase in global sugar consumption, totaling 179.63 million metric tons, along with a projected decline in global sugar ending stocks to 45.427 million metric tons.
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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
