Global Sugar Prices Decline Amid Stronger Dollar and Supply Adjustments
March NY world sugar #11 (SBH25) closed at -0.09 (-0.47%) on Monday, while March London ICE white sugar #5 (SWH25) fell by -5.40 (-1.04%).
Market Pressure from Rising Dollar
Sugar prices experienced a modest decline on Monday, influenced by a three-week high in the dollar index (DXY00). This trend marks a four-month downtrend in sugar prices.
Supply Changes Impacting Prices
Historically low sugar prices were noted on January 21, with NY sugar hitting a 5-1/2 month low and London sugar reaching a 3-1/2 year low. A positive outlook for sugar supply globally is contributing to this pressure. India announced on January 20 that it would permit its sugar mills to export 1 million metric tons (MMT) of sugar this season, easing previous export restrictions. Since October 2023, India has limited sugar exports to ensure there is enough for domestic consumption, allowing only 6.1 MMT during the 2022/23 season compared to a record 11.1 MMT in the season before.
International Sugar Organization Adjusts Forecasts
On November 21, the International Sugar Organization (ISO) revised its global sugar deficit forecast for 2024/25 to -2.51 MMT, an improvement from the August prediction of -3.58 MMT. Additionally, they increased the 2023/24 global sugar surplus estimate to 1.31 MMT from 200,000 metric tons in August.
Thailand’s Production Surge Raises Concerns
In Thailand, a projected increase in sugar production may weigh down prices. On October 29, the Office of the Cane and Sugar Board forecasted an 18% year-over-year rise, anticipating production to reach 10.35 MMT. Last season, Thailand produced 8.77 MMT, solidifying its position as the world’s third-largest sugar producer and second-largest exporter.
Support Factors Amid Production Challenges
Support for sugar prices emerged last Wednesday when Czarnikow lowered its estimate for Thailand’s 2024/25 production to 10.8 MMT, down from a previous estimate of 11.6 MMT. In India, the Indian Sugar and Bio-energy Manufacturers Association (ISM) reported on January 9 that sugar production from October 1 to December 31 had decreased by 15.5% year-over-year to 9.54 MMT. The ISM forecasts a 15% annual drop in India’s overall sugar production for the 2024/25 season, projecting it will hit a five-year low of 27.27 MMT.
Brazil’s Sugar Crop Affected by Natural Disasters
Last year, drought and extreme heat led to fires in Brazil’s top sugar-producing state, Sao Paulo, which damaged crops. According to the sugar cane industry group Orplana, around 2,000 fires affected up to 80,000 hectares of sugarcane. Green Pool Commodity Specialists estimate that 5 MMT of sugar cane may have been lost due to these fires. Brazil’s government crop forecasting agency, Conab, revised its 2024/25 sugar production forecast on November 21 to 44 MMT from an earlier estimate of 46 MMT, citing decreased yields from the adverse weather conditions. Unica recently reported that total sugar output in Brazil’s Center-South region is down 5.5% year-over-year to 39.794 MMT as of mid-January.
Global Sugar Production Trends Ahead
In terms of global production, the ISO projected an overall production of 179.3 MMT for 2024/25, representing a 1.1% drop from 2023/24. The USDA, in its bi-annual report released on November 21, estimated that global sugar production would rise by 1.5% year-over-year to reach a record 186.619 MMT, while overall human consumption is expected to climb by 1.2% year-over-year, reaching a new high of 179.63 MMT. The USDA also predicts that global ending stocks for sugar will fall by 6.1% year-over-year to about 45.427 MMT.
On the date of publication, Rich Asplund did not hold any positions in the securities mentioned in this article. All information and data included are for informational purposes only. For further details, please review the Barchart Disclosure Policy here.
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