Sugar Prices Dip as Brazil’s Weather and Production Outlook Weighs on Market
Sugar Market Shows Decline Amid Improved Global Supply Outlook
March NY world sugar #11 (SBH25) is down -0.49 (-2.28%), while March London ICE white sugar #5 (SWH25) decreased by -16.90 (-3.05%).
Today, sugar prices are falling, with NY sugar hitting a one-week low, and London sugar reaching a one-month low. This trend is largely due to predicted rain in Brazil’s Center-South, a key area for sugar production in the country.
International Adjustments Impact Sugar Market Dynamics
On the previous Monday, NY sugar dropped to a 2.5-month low as the forecast for global sugar supply improved. The International Sugar Organization (ISO) updated its 2024/25 global sugar deficit forecast to -2.51 MMT, a rise from an earlier projection of -3.58 MMT from August. The ISO also raised its estimate for the 2023/24 global sugar surplus to 1.31 MMT, up from a prior estimate of 200,000 MT.
Thailand’s Rising Production Forecast Poses Further Challenges
Looking forward, heightened sugar production in Thailand could pressure prices. According to the Office of the Cane and Sugar Board, Thailand’s sugar output for the 2024/25 season is set to increase by 18% year-over-year to 10.35 MMT, following a production level of 8.77 MMT for the 2023/24 season that concluded in April. Thailand currently ranks as the world’s third-largest sugar producer and the second-largest exporter.
Challenges for Brazil’s Sugar Output
Brazil’s sugar output from the Center-South region has seen a notable decline. Unica reported on November 20 that sugar output in this area during early November plummeted by 59.2% year-over-year to just 898 MT. Cumulatively, through mid-November, the 2024/25 sugar output in this region has decreased by 3.0% year-over-year, totaling 38.274 MMT.
Impact of Extreme Weather on Brazilian Sugar Crops
Previous drought and heat waves have wreaked havoc on sugar crops in Brazil’s principal sugar-producing region, Sao Paulo. The industry group Orplana reported that as many as 2,000 fire outbreaks impacted around 80,000 hectares of planted sugarcane. Commodity specialists at Green Pool have indicated that approximately 5 MMT of sugarcane may have been lost to these fires. As a result, Conab, Brazil’s government agency for crop forecasting, revised its 2024/25 sugar production estimate down from 46 MMT to 44 MMT, attributing the change to reduced sugarcane yields due to adverse weather conditions.
India’s Export Policies Provide Some Support to Sugar Prices
An interesting development that supports sugar prices occurred when India’s Food Ministry lifted restrictions on sugar mills producing ethanol for the 2024/25 year—which begins in November. This decision may prolong India’s sugar export curbs. Back in December, India had directed mills to halt the use of sugarcane for ethanol production during the 2023/24 year to enhance sugar reserves. Since October 2023, India has restricted sugar exports to maintain sufficient domestic supplies. India allowed only 6.1 MMT of sugar exports for the 2022/23 season, sharply down from a record 11.1 MMT the year prior. Yet, on October 3, the Indian Sugar and Bio-Energy Manufacturers Association (ISM) forecasted that India would have 2 MMT of sugar available for export next season.
Shifts in India’s Sugar Production and Reserves
The ISM reported on May 13 that India’s sugar production for the 2023/24 cycle (from October to April) fell by 1.6% to 31.4 MMT. Furthermore, projections from September 26 indicated a potential decrease of 2% in sugar production for 2024/25 to 33.3 MMT, with sugar reserves expected to be around 8.4 MMT as of September 30, down from an earlier forecast of 9.1 MMT.
Global Production Trends and Consumption Forecasts
Adding to the complexity, the ISO’s forecast from August 30 anticipates a slight decline in global sugar production to 179.3 MMT for 2024/25, down 1.1% from 181.3 MMT in 2023/24. However, the USDA’s bi-annual report, released on November 21, projected a 1.5% increase in 2024/25 global sugar production to a record 186.619 MMT, alongside a 1.2% rise in human sugar consumption to reach 179.63 MMT. The USDA also forecasts a 6.1% decline in global ending stocks 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 for informational purposes only. For more information, please view the Barchart Disclosure Policy
here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
