Sugar Prices Drop on Increased Global Supply Expectations

July NY world sugar #11 (SBN25) is down -0.29 (-1.66%), while August London ICE white sugar #5 (SWQ25) is down -5.80 (-1.17%).

Market Overview

Todays’ sugar prices are experiencing moderate declines. London sugar has hit a 3-1/2 month low, influenced by expectations of larger global sugar supplies. Last Friday, July NY sugar marked a 3-3/4 year nearest-futures low, primarily due to forecasts of increased sugar production in Brazil. Data from Unica, released last Wednesday, indicated that Brazil Center-South sugar production for the first half of April rose by +1.3% year-over-year to 731,000 MT. This was reported as the first data for the 2025/26 season.

Brazillian Sugar Production Forecasts

Conab’s forecasts from last Tuesday suggest that Brazil’s 2025/26 sugar production is set to increase by +4.0% year-over-year to 45.875 MMT. The Brazilian real’s weakness is also impacting sugar prices. The currency fell to a two-week low against the dollar, facilitating export sales from Brazil’s sugar producers.

Global Sugar Production Projections

India’s 2025/26 sugar production is projected to rise by +26% year-over-year to 35 MMT, according to the USDA’s Foreign Agricultural Service (FAS). This prediction is attributed to favorable monsoon rains and increased sugar acreage. On April 23, the USDA’s FAS stated that Brazil’s 2025/26 sugar production would grow by +2.3% year-over-year to 44.7 MMT, up from 43.7 MMT the previous season.

Impact of Monsoon Season

Expectations for an abundant monsoon in India are further suppressing sugar prices. On April 15, India’s Ministry of Earth Sciences predicted that this year’s monsoon would be above normal, with total rainfall forecast at 105% of the long-term average. As a reminder, India’s monsoon season typically runs from June through September.

Export Restrictions and Production Changes in India

In a bearish turn, the Indian government announced on January 20 that it would allow sugar mills to export 1 MMT of sugar this season. This decision eases restrictions initially implemented in October 2023 to ensure adequate domestic supplies. During the 2022/23 season, India only allowed 6.1 MMT of sugar exports after a record 11.1 MMT in the previous season. The Indian Sugar Mills Association (ISMA) forecasts that India’s 2024/25 sugar production may decrease by -17.5% year-over-year to a five-year low of 26.4 MMT.

Thailand’s Increased Production

Thailand’s outlook is similarly bearish for sugar prices, with the Office of the Cane and Sugar Board reporting a +14% year-over-year increase in sugar production to 10.00 MMT for the 2024/25 crop year. Thailand ranks as the world’s third-largest sugar producer and second-largest exporter.

Supportive Factors for Sugar Prices

Despite forecasts for increased global sugar production, certain indicators remain supportive of sugar prices. Unica reported on April 14 that cumulative sugar output in Brazil’s Center-South for the 2024/25 season had decreased by 5.3% year-over-year to 40.169 MMT. Meanwhile, the Indian Sugar and Bio-energy Manufacturers Association reduced its sugar production forecast for 2024/25 to 26.4 MMT, citing lower cane yields.

Global Market Insights

On March 6, the International Sugar Organization (ISO) revised its 2024/25 global sugar deficit forecast to -4.88 MMT from -2.51 MMT, indicating a tighter market compared to the 2023/24 surplus of 1.31 MMT. The ISO also lowered its global sugar production estimate to 175.5 MMT from an earlier prediction of 179.1 MMT.

Challenges from Drought and Heat

Recent drought conditions and excessive heat have damaged sugar crops in Brazil’s leading sugar-producing region, Sao Paulo. Reports from Green Pool Commodity Specialists indicate that up to 5 MMT of sugar cane may have been lost due to these adverse conditions. Conab estimates that 2024/25 sugar production in Brazil will fall by -3.4% year-over-year to 44.118 MMT, primarily due to lower yields.

USDA Projections

In its bi-annual report released on November 21, the USDA projected that global 2024/25 sugar production would rise by +1.5% year-over-year to a record 186.619 MMT. Additionally, human sugar consumption is expected to grow by +1.2% year-over-year to 179.63 MMT, while global ending stocks are forecast to decline 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 is solely for informational purposes. For more information, please view the Barchart Disclosure Policy
here.

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