Sugar Market Sees Gains Amid Weak Dollar and Production Forecasts

On May 1, July NY world sugar #11 (SBN25) increased by +0.20 (+1.16%). In contrast, August London ICE white sugar #5 (SWQ25) remains inactive today as UK markets are closed for the May Day holiday.

Market Dynamics Drive Sugar Price Increase

Today’s rise in sugar prices can be attributed to a weaker dollar (DXY00), which has fueled short-covering in sugar futures following last week’s sell-off.

Production Reports Impacting Future Expectations

Last Friday, July NY sugar marked a 3-3/4 year nearest-futures low, while London sugar saw a 2-week low amid expectations of increased sugar production in Brazil. On April 26, Unica reported that Brazil’s Center-South sugar production for early April rose +1.3% year-over-year to 731,000 MT. This marked the first report for the 2025/26 season.

Furthermore, Conab’s projections predict Brazil’s sugar production for 2025/26 will increase by +4.0% year-over-year to 45.875 MMT.

Deliveries Indicate Demand Weakness

Bloomberg reported last Thursday that Louis Dreyfus was the sole trader to deliver raw sugar for the May NY futures contract that expired on Wednesday. Approximately 1.5 MMT of sugar was delivered, marking the fifth-largest delivery for this contract in five years, according to StoneX. This significant delivery points to weakened sugar demand.

Global Production Trends and Their Impact

Rising forecasts for global sugar production are bearish for prices. On April 23, the USDA’s Foreign Agricultural Service (FAS) predicted Brazil’s 2025/26 sugar production would increase by +2.3% year-over-year to 44.7 MMT. An anticipated above-normal monsoon in India, forecasted to deliver 105% of the long-term average rainfall, is expected to further suppress sugar prices during their monsoon season from June to September.

Additionally, consultant Datagro projected on March 12 that Brazil’s Center-South sugar production could surge +6% year-over-year to 42.4 MMT. Green Pool Commodity Specialists also forecast that the global sugar market will shift to a surplus of +2.7 MMT in the 2025/26 crop year, contrasting with a previous deficit estimate of -3.7 MMT in 2024/25.

India and Thailand: Key Players in Production Forecasts

Recent announcements from the Indian government indicate they will allow sugar mills to export 1 MMT of sugar, easing restrictions. Historically, India restricted sugar exports since October 2023 to bolster domestic supply, permitting only 6.1 MMT during the previous season after allowing a record 11.1 MMT in the 2021/22 season. However, the ISMA anticipates India’s 2024/25 sugar production will decline by -17.5% year-over-year to a five-year low of 26.4 MMT. As reported by the ISMA on April 17, sugar production from October 1 to April 15 fell by -18% compared to last year. Furthermore, India’s Food Secretary indicated that exports for the 2024/25 season might be limited to 800,000 MT, falling below prior estimates.

In contrast, Thailand’s sugar output is expected to rise. The Office of the Cane and Sugar Board reported last Friday that sugar production for 2024/25 would increase by +14% year-over-year to 10.00 MMT, affirming Thailand’s role as the world’s third-largest sugar producer and second-largest exporter.

Assessing Global Supply Trends

Conversely, signs of declining global sugar production may support sugar prices. On April 14, Unica reported a 5.3% year-over-year reduction in Brazil’s cumulative sugar output through March, totaling 40.169 MMT. Meanwhile, the Indian Sugar and Bio-energy Manufacturers Association revised its sugar production forecast for 2024/25 down to 26.4 MMT, attributing the drop to lower cane yields.

Meanwhile, the International Sugar Organization (ISO) raised its 2024/25 global sugar deficit forecast to -4.88 MMT from -2.51 MMT, indicating a tightening market compared to the previous surplus of 1.31 MMT in 2023/24. The ISO also revised its global sugar production forecast down to 175.5 MMT from 179.1 MMT.

Environmental Factors and Their Ongoing Impact

Drought and excessive heat last year resulted in significant crop damage in Brazil’s top sugar-producing region, Sao Paulo. Green Pool Commodity Specialists estimate that as much as 5 MMT of sugar cane was lost due to fires. Moreover, Conab projected a -3.4% year-over-year decline in Brazil’s sugar production for 2024/25, estimating it at 44.118 MMT due to adverse weather conditions.

USDA’s Projections for Sugar Production and Consumption

According to the USDA’s bi-annual report released on November 21, global sugar production for 2024/25 is expected to increase by +1.5% year-over-year to a record 186.619 MMT. Human sugar consumption is also predicted to rise by +1.2% year-over-year to a new high of 179.63 MMT, while ending stocks are forecasted to decrease by -6.1% year-over-year to 45.427 MMT.

On the date of publication, Rich Asplund did not hold positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. For more details, please view the Barchart Disclosure Policy.

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