Sugar Prices Drop as Brazil’s Rain Forecasts Ease Supply Concerns

On Thursday, May NY world sugar #11 (SBK25) closed down -0.26 (-1.34%), while May London ICE white sugar #5 (SWK25) fell -2.50 (-0.46%).

Sugar prices fell to 1-1/2 week lows due to predictions of rain in Brazil, alleviating dryness concerns. Meteorologist Climatempo announced that widespread showers are expected in Brazil’s sugar-growing regions over the coming week.

Sugar Production Updates and Export Quotas

In related news, India plans to keep its one-million-ton sugar export quota for the current season. This decision helps alleviate fears surrounding export restrictions from the world’s second-largest sugar producer. Recently, sugar prices had surged, with NY sugar reaching a one-month high last Tuesday and London sugar hitting a four-month high due to indications of decreased global sugar production.

According to Unica, cumulative 2024/25 sugar output in Brazil’s Center-South through mid-March dropped by -5.3% year-on-year to 39.983 million metric tons (MMT). Additionally, sugar trader Czarnikow lowered its 2025/26 sugar production estimate for Brazil from 43.6 MMT to 42 MMT. Meanwhile, the Indian Sugar and Bio-Energy Manufacturers Association revised its 2024/25 production forecast down to 26.4 MMT, a decrease from its January estimate of 27.27 MMT, due to lower cane yields.

Global Sugar Market Dynamics

The International Sugar Organization (ISO) recently raised its 2024/25 global sugar deficit forecast to -4.88 MMT, up from a previous estimate of -2.51 MMT. This indicates a tightening market compared to the 2023/24 global sugar surplus of 1.31 MMT. Moreover, the ISO cut its global sugar production forecast for 2024/25 to 175.5 MMT, down from 179.1 MMT.

On the other hand, consultancy Datagro estimated that Brazil’s Center-South sugar production could rise by +6% year-on-year to 42.4 MMT in 2025/26. Furthermore, Green Pool Commodity Specialists projected that global sugar markets will experience a surplus of +2.7 MMT in the 2025/26 crop year, a reversal from the deficit forecasted for 2024/25.

India’s Sugar Production and Export Policies

In a bearish development, the Indian government announced on January 20 that it would permit sugar mills to export up to 1 MMT of sugar this season, easing previous export restrictions. Since October 2023, India has limited sugar exports to maintain sufficient domestic supplies. In the 2022/23 season, India enabled mills to export only 6.1 MMT, down from a record 11.1 MMT the previous year. Despite these quotas, the India Sugar Mills Association (ISMA) predicts that India’s 2024/25 sugar production will decline by -17.5% year-on-year, reaching a five-year low of 26.4 MMT.

Potential Increases in Thailand’s Sugar Production

The anticipated rise in sugar production in Thailand could negatively affect sugar prices. Thailand’s Office of the Cane and Sugar Board projected that sugar production for 2024/25 could increase by +18% year-on-year to 10.35 MMT, compared to 8.77 MMT produced in the 2023/24 season. As the world’s third-largest sugar producer and the second-largest exporter, Thailand’s increased output could influence global sugar supply.

Impact of Drought on Brazilian Sugar Production

Drought and excessive heat last year severely damaged sugar crops in Brazil’s leading sugar-producing state of São Paulo. Green Pool Commodity Specialists noted that up to 5 MMT of sugar cane may have been lost due to fires. Consequently, Conab, Brazil’s government crop forecasting agency, decreased its 2024/25 sugar production estimate from a previous forecast of 46 MMT to 44 MMT, attributing this adjustment to lower sugarcane yields caused by weather conditions.

The USDA’s bi-annual report, released on November 21, projected a +1.5% increase in global sugar production for 2024/25 to a record 186.619 MMT, along with a +1.2% rise in global human sugar consumption to a record 179.63 MMT. Additionally, the USDA estimated a decline of -6.1% year-on-year in 2024/25 global sugar 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
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