Global Sugar Prices Dip as Surplus Forecasts Weigh Heavily
Recent Trends in Sugar Production and Pricing
March NY world sugar #11 (SBH25) closed down -0.19 (-0.96%) on Thursday, while March London ICE white sugar #5 (SWH25) decreased -5.90 (-1.12%). Sugar prices fell from a 7-week high, closing moderately lower due to predictions of a global sugar surplus. Green Pool Commodity Specialists have forecasted a surplus of +2.7 MMT for the 2025/26 crop year, contrasting sharply with a deficit of -3.7 MMT expected for the 2024/25 season.
The initial rise in sugar prices Thursday was propelled by the strengthening of the Brazilian real (^USDBRL), which reached a 2-1/2 month high against the dollar. A stronger currency typically discourages Brazilian sugar producers from selling their products abroad.
Support for sugar prices was also noted from earlier reports indicating a decrease in India’s sugar production for the 2024/25 season. Centrum reported a reduction of -12.2% year-on-year, estimating production at 16.5 MMT from October 1 to January 31. Despite a downward trend lasting four months, this news provided temporary buoyancy.
On January 21, New York sugar futures reached a 5-1/2 month low, with London sugar touching a 3-1/2 year low. The situation appears precarious as expectations for increased global sugar supply begin to exert influence on market prices. Recently, India announced it would allow its sugar mills to export 1 MMT this season, lifting previous restrictions set since October 2023 designed to maintain domestic levels. Last season, India allowed only 6.1 MMT of sugar to be exported, following a record high of 11.1 MMT the prior year.
The International Sugar Organization (ISO) on November 21 revised its 2024/25 global sugar deficit forecast to -2.51 MMT, a significant change from the initial estimate of -3.58 MMT made in August. The ISO also increased its prediction for the current season’s global sugar surplus, projecting a figure of 1.31 MMT, up from a previously stated 200,000 MT.
Thailand’s escalating sugar production forecast poses another challenge for sugar prices. The Office of the Cane and Sugar Board projected a +18% year-on-year increase for the 2024/25 season, reaching an estimated 10.35 MMT, following last season’s production of 8.77 MMT. As the world’s third-largest sugar producer, any increase in Thailand’s output typically impacts global prices.
Last Wednesday, Czarnikow’s adjustment of its Thailand production estimate to 10.8 MMT from 11.6 MMT provided some market relief. However, issues still loom for Brazil, where over the past year, drought and extreme heat have resulted in crop damage. Reports indicate that approximately 2,000 fires have devastated around 80,000 hectares in São Paulo, Brazil, with Green Pool estimating a potential loss of up to 5 MMT of sugarcane. Brazil’s government crop forecaster, Conab, lowered its estimate for 2024/25 sugar production from 46 MMT to 44 MMT due to declining sugarcane yields attributed to these adverse conditions. Unica reported that the cumulative sugar output through mid-January is down -5.5% year-on-year to 39.794 MMT.
Evidence of reduced sugar production in India, the second-largest producer, is also granting support to prices. The ISM predicts a decline of -15% year-on-year, leading to a 5-year low production of 27.27 MMT for the 2024/25 season.
Moreover, the ISO’s forecast from August 30 estimates global sugar production for 2024/25 at 179.3 MMT, representing a -1.1% decrease from the previous year’s 181.3 MMT.
The USDA’s bi-annual report released on November 21 projects a +1.5% year-on-year increase in global sugar production for 2024/25, reaching a record 186.619 MMT. Conversely, they estimate a +1.2% jump in human sugar consumption for the same period, leading to a forecast of 179.63 MMT. However, global ending stocks are expected to decrease by -6.1% yearly, down 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 are solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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