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“Global Supply Optimism and Strong Dollar Drive Down Sugar Prices”

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Sugar Prices Drop as Supply Outlook Improves

Recent Trends Show Downward Movement for Sugar Futures

March NY world sugar #11 (SBH25) is currently down -0.29 (-1.51%), while March London ICE white sugar #5 (SWH25) has decreased by -7.30 (-1.45%).

Today, sugar prices are facing a moderate decline, with NY sugar hitting a 4-month low and London sugar reaching a 2-3/4 year low. This drop coincides with a rise in the dollar index (DXY00) to a 2-year peak, which generally negatively affects commodity prices, sugar included. Over the last three months, sugar prices have continued their downward trend due to improved supply forecasts. The International Sugar Organization (ISO) adjusted its 2024/25 global sugar deficit estimate to -2.51 MMT, which is an improvement from the previous August figure of -3.58 MMT. Additionally, ISO increased its 2023/24 global sugar surplus estimate from +200,000 MT to 1.31 MMT.

In a recent update from December 19, India’s Food Secretary, Chopra, indicated that India might permit sugar exports if a surplus exists after fulfilling domestic ethanol blending mandates. The Indian government currently projects a sugar surplus of around 1 MMT for this season.

On the production front, Thailand’s forecast for higher sugar output adds bearish pressure to prices. Thailand’s Office of the Cane and Sugar Board announced on October 29 that the country’s sugar production for 2024/25 is expected to increase by 18% year-on-year to 10.35 MMT, up from 8.77 MMT in the previous 2023/24 season. Thailand holds the title of the world’s third-largest sugar producer and the second-largest exporter.

On the flip side, reduced sugar production in India may offer some support for sugar prices. The Indian Sugar and Bio-energy Manufacturers Association (ISM) reported on Thursday that sugar production from October 1 to December 31 for 2024/25 has decreased by 15.5% year-on-year, totaling 9.54 MMT. This dip in output could lead to continued export restrictions from the Indian government, impacting global sugar availability.

Brazil is facing its own challenges. Last year’s drought and excessive heat resulted in fires damaging sugar crops in Sao Paulo, the country’s leading sugar-producing state. Orplana reported that around 2,000 fires impacted 80,000 hectares of sugar cane. Green Pool Commodity Specialists noted that as much as 5 MMT of sugar cane could have been lost. Consequently, Conab, Brazil’s government crop forecasting agency, revised its 2024/25 sugar production estimate down from 46 MMT in November to 44 MMT, citing lower yields due to weather conditions. Unica’s recent report revealed that Brazilian sugar production in the Center-South region is down 5.1% year-on-year to 39.711 MMT for the 2024/25 season.

Another factor bolstering sugar prices is India’s Food Ministry’s decision on August 30 to lift restrictions on sugar mills producing ethanol for the 2024/25 year, potentially extending export caps on sugar. In late 2023, India had directed mills to halt sugarcane usage for ethanol production to strengthen sugar reserves. With sugar exports limited to only 6.1 MMT during the 2022/23 season, a decline from a record 11.1 MMT the previous year, the Indian Sugar and Bio-energy Manufacturers Association has urged the government to reconsider export restrictions, projecting 2 MMT of available sugar for the upcoming season.

Looking forward, the ISM’s September 26 forecast suggested a 2% year-on-year reduction in India’s sugar production for 2024/25 to 33.3 MMT, with projected sugar reserves at 8.4 MMT by September 30.

In a contrasting viewpoint, the ISO projected on August 30 that global sugar production for 2024/25 would reach 179.3 MMT, a 1.1% decline from the previous year’s 181.3 MMT.

The USDA further projected in its November 21 report that global sugar production for 2024/25 could rise 1.5% year-on-year to a record 186.619 MMT, alongside a 1.2% increase in human sugar consumption to 179.63 MMT. Notably, global sugar ending stocks are expected to decrease by 6.1% to 45.427 MMT.


On the date of publication, Rich Asplund did not hold any positions, directly or indirectly, in any of the securities mentioned. All information and data are provided for informational purposes only. Please see the Barchart Disclosure Policy for further details.

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

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