Global Sugar Prices Narrowly Retreat Amid Production Adjustments

On Monday, May NY world sugar #11 (SBK25) closed down -0.10 (-0.52%), while May London ICE white sugar #5 (SWK25) decreased by -0.80 (-0.15%). Sugar prices dipped to 2-1/2 week lows, reflecting modest losses throughout the trading day.

The decline in prices was attributed to a report from Meteorologist Climatempo, which indicated above-average rainfall in Brazil over the past week. This weather development is favorable for the country’s sugar crop, applying downward pressure on prices.

Nonetheless, sugar prices rebounded much of the losses as crude oil prices rose by +3% (CLK25) to a five-week peak. The increase in crude oil can influence sugar markets favorably; higher crude prices can lead to elevated ethanol prices, incentivizing sugar mills to focus more on ethanol production rather than sugar, likely reducing sugar supplies.

Production Forecasts Indicate Global Tightening

Current data suggest a tightening global sugar market, which supports sugar prices. On March 12, the Indian Sugar and Bio-energy Manufacturers Association revised its 2024/25 sugar production forecast down to 26.4 million metric tons (MMT) from a previous estimate of 27.27 MMT, citing reduced yields from sugarcane. This adjustment follows a report from Unica, announcing that Brazil’s cumulative 2024/25 sugar output in the Center-South region through mid-March decreased by 5.3% year-over-year to 39.983 MMT.

Moreover, sugar trader Czarnikow adjusted its Brazil 2025/26 sugar production estimate downward to 42 MMT from 43.6 MMT previously projected in February. In contrast to these reductions, the International Sugar Organization (ISO) raised its forecast for the 2024/25 global sugar deficit to -4.88 MMT from -2.51 MMT, indicating a significantly tightened market compared to a surplus of 1.31 MMT for the 2023/24 season.

Conflicting Projections and Market Response

Bearish sentiments linger in the market as well. Consultancy Datagro projected an increase in Brazil’s Center-South sugar production for 2025/26 by +6% year-over-year to 42.4 MMT. Similarly, Green Pool Commodity Specialists forecasted a shift in the global sugar market to a surplus of +2.7 MMT in the 2025/26 crop year, contrasting with the earlier predicted deficit of -3.7 MMT for 2024/25.

On the bearish side, the Indian government announced on January 20 that it would permit its sugar mills to export 1 MMT of sugar this season, lifting some restrictions on exports that had been in place since October 2023. During the previous season, India’s exports were limited to 6.1 MMT after allowing a record 11.1 MMT in the 2021/22 season. Despite these allowances, the India Sugar Mills Association (ISMA) forecasts a -17.5% year-over-year drop in India’s 2024/25 sugar production to a five-year low of 26.4 MMT.

Regional Contributions to Global Supply

Thailand is also positioned to contribute to the global sugar supply. The Office of the Cane and Sugar Board projects that Thailand’s sugar production will rise by +18% year-over-year to 10.35 MMT for the 2024/25 season, up from 8.77 MMT in the previous season. As the world’s third-largest sugar producer and second-largest exporter, this increase could place additional pressure on global sugar prices.

Weather conditions in Brazil have adversely affected its sugar crops. Drought and excessive heat led to significant fires in Brazil’s top sugar-producing state of São Paulo, resulting in an estimated loss of up to 5 MMT of sugarcane. In response to these adverse conditions, Conab, Brazil’s government crop forecasting agency, reduced its 2024/25 sugar production forecast to 44 MMT from 46 MMT.

The USDA also weighed in, forecasting that global sugar production would rise by +1.5% year-over-year to a record 186.619 MMT for 2024/25. Additionally, it projected a +1.2% year-over-year increase in global human sugar consumption to 179.63 MMT and a decrease in global sugar 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 is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.

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