On Thursday, May NY world sugar #11 (SBK25) closed up +0.39 (+2.07%), while May London ICE white sugar #5 (SWK25) also saw gains, closing up +5.50 (+1.03%).

Thursday marked an extension of this week’s advances in sugar prices, with NY sugar reaching a two-week high. Price increases are supported by lower sugar production in Brazil, as reported by Unica, which noted that cumulative sugar output in the Center-South region for the 2024/25 season through February fell by -5.6% year-on-year to 39.822 million metric tons (MMT). Prices were further bolstered by Wednesday’s announcement from the Indian Sugar and Bio-energy Manufacturers Association, which downgraded its 2024/25 sugar production forecast for India to 26.4 MMT from an earlier estimate of 27.27 MMT, attributing the reduction to lower cane yields.

Commodity Bulletin: From crude oil to coffee, this FREE newsletter is for industry pros and rookies alike.

Furthermore, the International Sugar Organization (ISO) increased its forecast for the global sugar deficit in 2024/25 to -4.88 MMT, up from a previous estimate of -2.51 MMT in November. This indicates a shift from the 2023/24 global sugar surplus of 1.31 MMT. In the same announcement, the ISO revised its global sugar production forecast downward to 175.5 MMT from 179.1 MMT in November. On February 5, Green Pool Commodity Specialists projected that the global sugar market would experience a surplus of +2.7 MMT in the 2025/26 crop year, reversing their earlier deficit prediction of -3.7 MMT for 2024/25.

Last Thursday, sugar prices dropped to seven-week lows due to signs of weak demand. Sugar traders Wilmar International Ltd and Sucres et Denrees SA recorded the delivery of 1.7 MMT of raw sugar against the March NY futures contract, which expired on February 28. Such large deliveries are typically bearish for market prices, indicating limited buy-side activity.

Further bearish indicators included a projection from consultant Datagro stating that Brazil’s Center-South sugar production in 2025/26 is expected to rise to 42.4 MMT, a +6% increase year-on-year. Additionally, sugar trader Czarnikow forecasted a record production level of 43.6 MMT for Brazil in 2025/26, as producing sugar becomes more profitable compared to ethanol.

In a bearish development, the Indian government announced on January 20 that it would permit its sugar mills to export 1 MMT of sugar this season, relaxing previous restrictions on exports imposed in 2023. India had previously limited sugar exports to 6.1 MMT during the 2022/23 season, down from a record 11.1 MMT the prior year. However, the India Sugar Mills Association (ISMA) is projecting a -17.5% year-on-year decline in India’s 2024/25 sugar production, foreseeing a five-year low of 26.4 MMT.

Meanwhile, an anticipated increase in sugar production in Thailand could exert downward pressure on sugar prices. On October 29, Thailand’s Office of the Cane and Sugar Board projected that the country’s production for 2024/25 could rise by +18% year-on-year to 10.35 MMT. For context, Thailand produced 8.77 MMT of sugar in the 2023/24 season, maintaining its status as the world’s third-largest sugar producer and second-largest exporter.

Brazil’s production outlook has been hindered by drought and excessive heat last year, which caused fires in its major sugar-producing state, São Paulo. Green Pool Commodity Specialists indicated that as much as 5 MMT of sugar cane may have been lost due to these incidents. Consequently, Conab, Brazil’s crop forecasting agency, revised its 2024/25 sugar production estimate down from 46 MMT to 44 MMT, citing lower yields.

In its bi-annual report released on November 21, the USDA projected a +1.5% year-on-year increase in global sugar production for the 2024/25 season, reaching a record 186.619 MMT. In addition, global sugar consumption is expected to rise by +1.2% year-over-year to 179.63 MMT, while ending stocks are forecasted to decline by -6.1% 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.

More news from Barchart

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.