Global Sugar Prices Decline Amid Mixed Market Signals

May NY world sugar #11 (SBK25) has decreased by -0.07 (-0.39%), while August London ICE white sugar #5 (SWQ25) has fallen by -0.40 (-0.08%).

Market Trends and Factors Influencing Sugar Prices

Today’s drop in sugar prices follows negative momentum from Wednesday. The USDA’s Foreign Agricultural Service (FAS) has projected that Brazil’s sugar production for the 2025/26 season will increase by +2.3% year-over-year, rising to 44.7 million metric tons (MMT) from 43.7 MMT last season.

Concerns about the ongoing global trade war also persist. Analysts fear that it may undermine global economic growth and lead to higher tariffs on sugar, which could suppress consumer demand. However, the negative pressure on sugar prices is somewhat mitigated by the news of reduced sugar output in India. Last Thursday, the Indian Sugar and Bio-Energy Manufacturers Association (ISMA) reported that India’s sugar production from October 1 to April 15 reached 25.5 MMT, which is down -18% compared to last year.

Recent Price Movements and Forecasts

Last week, sugar prices came under pressure. NY sugar hit a 2½-year nearest-futures low last Tuesday, while London sugar reached a 3-month low the following day. The expectation of substantial rainfall in India, which could boost sugar production, is adding downward pressure on prices. India’s Ministry of Earth Sciences has predicted an above-normal monsoon, forecasting total rainfall at 105% of the long-term average for the season that runs from June through September.

Furthermore, a bearish forecast from consultant Datagro on March 12 projected that Brazil’s Center-South sugar production for 2025/26 would increase by +6% year-over-year to 42.4 MMT. In addition, Green Pool Commodity Specialists estimated a shift in the global sugar market from a deficit of -3.7 MMT in 2024/25 to a surplus of +2.7 MMT in 2025/26.

Export Restrictions and Government Policies

India’s government has also been proactive regarding sugar exports. On January 20, it announced that sugar mills would be allowed to export 1 MMT this season, easing prior restrictions. Since October 2023, India has limited sugar exports to maintain sufficient domestic supplies. During the 2022/23 season, exports totaled only 6.1 MMT, a significant reduction compared to the record 11.1 MMT in the prior season. However, ISMA forecasts a -17.5% year-over-year decline in India’s 2024/25 sugar production to a five-year low of 26.4 MMT.

Global Production Insights

In another bearish development, Thailand’s sugar production for 2024/25 is projected to increase by +14% year-over-year to 10.00 MMT. As the world’s third-largest sugar producer and second-largest exporter, this could further impact global prices.

Conversely, indications of lower production globally provide some support for sugar prices. Unica reported that Brazil’s cumulative sugar output for 2024/25 through March has dropped by 5.3% year-over-year to 40.169 MMT. Additionally, ISMA revised down its 2024/25 sugar production forecast for India to 26.4 MMT from an earlier estimate of 27.27 MMT due to lower cane yields.

Global Sugar Deficit Projections

According to the International Sugar Organization (ISO), the global sugar deficit forecast for 2024/25 was raised to -4.88 MMT from an earlier prediction of -2.51 MMT. This reflects a tightening market, especially in contrast to the 2023/24 surplus of 1.31 MMT. The ISO also lowered its global production forecast for 2024/25 to 175.5 MMT, down from 179.1 MMT.

Drought and excessive heat last year significantly impacted sugar crops in Brazil’s leading sugar-producing state, Sao Paulo, with Green Pool Commodity Specialists estimating the loss of up to 5 MMT of sugar cane due to fires. Conab, Brazil’s government crop forecasting agency, has projected a -3.4% year-over-year decline in Brazil’s 2024/25 sugar production to 44.118 MMT, citing lower yields caused by adverse weather conditions.

In its bi-annual report released on November 21, the USDA forecasted a +1.5% year-over-year increase in global sugar production for 2024/25, predicting a record output of 186.619 MMT. The USDA also estimated that human sugar consumption would rise +1.2% to a record 179.63 MMT, while global ending stocks were predicted to decline by -6.1% to 45.427 MMT.

On the date of publication, Rich Asplund did not hold any positions in 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.

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