Sugar Prices Decline Amid Brazilian Rain Forecasts and Production Adjustments
On Friday, May NY world sugar #11 (SBK25) closed down by -0.13 (-0.68%), while May London ICE white sugar #5 (SWK25) declined -2.10 (-0.39%). This drop extended sugar prices’ weekly decline to reach two-week lows.
Forecasted Rain Impacts Prices
Rain forecasts for Brazil played a significant role in easing dryness concerns, leading to a downward trend in sugar prices. Meteorologist Climatempo predicted widespread showers in Brazil’s sugar-growing regions into the upcoming week.
The Brazilian real (^USDBRL) fell to a two-week low on Friday, further contributing to the decline in sugar prices. A weaker real has been known to encourage increased export selling from Brazil’s sugar producers.
Production Forecasts and Recent Historical Context
Last Tuesday, both NY and London sugar prices hit recent highs, with NY sugar reaching a one-month peak and London sugar a four-month peak, reflecting concerns over lower global sugar production. On March 12, the Indian Sugar and Bio-energy Manufacturers Association revised its 2024/25 sugar production forecast to 26.4 million metric tons (MMT), down from 27.27 MMT in January, citing lower cane yields.
Additionally, a report from Unica indicated that Brazil’s cumulative sugar production in the Center-South for the 2024/25 crop year had fallen by 5.3% year-on-year to 39.983 MMT. Czarnikow also reduced its 2025/26 sugar production estimate for Brazil to 42 MMT, down from 43.6 MMT previously estimated in February.
Global Supply and Demand Shifts
The International Sugar Organization (ISO) raised its 2024/25 global sugar deficit forecast to -4.88 MMT, an increase from a previous estimate of -2.51 MMT. This indicates a tightening market after the global sugar surplus of 1.31 MMT in 2023/24. The ISO also lowered its 2024/25 global sugar production forecast to 175.5 MMT from 179.1 MMT.
In contrast, Datagro projected a +6% year-on-year increase in Brazil’s Center-South sugar production for 2025/26, estimating it at 42.4 MMT. Green Pool Commodity Specialists have forecasted a shift in the worldwide sugar market to a surplus of +2.7 MMT in the 2025/26 crop year from a deficit of -3.7 MMT in 2024/25.
India’s Export Policies and Production Outlook
India is also influencing the sugar market dynamics. The Indian government announced on January 20 that it would permit sugar mills to export 1 MMT of sugar during the current season, easing previously stringent restrictions set in place in 2023 to ensure domestic supply stability. During the 2022/23 season, India only allowed for the export of 6.1 MMT, a stark reduction from the record 11.1 MMT exported the prior season. However, the India Sugar Mills Association (ISMA) has projected that India’s sugar production for 2024/25 could fall by -17.5% year-on-year, landing at a five-year low of 26.4 MMT.
Thailand’s Growing Production and Its Implications
Conversely, forecasts for increased sugar production in Thailand add bearish pressure to global sugar prices. Thailand’s Office of the Cane and Sugar Board has projected that the country’s sugar output for the 2024/25 season will surge by +18% year-on-year to 10.35 MMT, up from the 8.77 MMT produced in 2023/24. As the world’s third-largest sugar producer and second-largest exporter, Thailand’s increase poses challenges to market stability.
Brazil’s 2024/25 Production Adjustments
Last year’s drought and extreme heat severely impacted Brazil’s sugar crops, particularly in the state of São Paulo. According to Green Pool Commodity Specialists, losses may have reached up to 5 MMT of sugar cane due to wildfires. Conab, Brazil’s crop forecasting agency, has revised its 2024/25 production estimate down from 46 MMT to 44 MMT, citing deteriorating sugarcane yields.
The USDA, in its November 21 report, projected an overall increase of +1.5% in global sugar production for 2024/25, anticipating a record output of 186.619 MMT. Likewise, global sugar consumption is estimated to rise by +1.2% to a record 179.63 MMT. The report also indicated a predicted decline of -6.1% in global 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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
