Market Update: Sugar Prices Show Resilience Amid Mixed Global Production Factors
Today’s Price Movement
March NY world sugar #11 (SBH25) rose by +0.04 (+0.19%), while March London ICE white sugar #5 (SWH25) increased by +3.40 (+0.64%).
Key Factors Driving Price Changes
Sugar prices are moderately up today, bouncing back from a low not seen in 2-3/4 months. The increase follows a report from the National Federation of India Cooperative Sugar Factories Ltd, which noted a significant drop in India’s sugar output. From October 1 to December 15, sugar production fell by -18% year-on-year to 6.1 MMT.
Brazil’s Sugar Production Affects the Market
Contrastingly, Brazil’s unexpectedly high sugarcane crush is impacting prices negatively. Recent data from Unica revealed that Brazil crushed 20.35 MMT of sugarcane in the second half of November, surpassing the anticipated 15.5 MMT.
Global Supply Outlook Softens Prices
The International Sugar Organization (ISO) recently adjusted its projections. As of November 21, the ISO has reduced its forecast for the global sugar deficit in 2024/25 to -2.51 MMT, down from -3.58 MMT earlier in August. Additionally, the ISO has increased its estimate for a global sugar surplus in 2023/24 to 1.31 MMT from a previous 200,000 MT.
Thailand’s Production Forecast and Its Effects
The forecast for sugar production in Thailand, one of the world’s major sugar producers, adds to the bearish sentiment. Thailand’s Office of the Cane and Sugar Board is projecting a -18% increase in sugar production to 10.35 MMT for the 2024/25 period. Last season, Thailand produced 8.77 MMT of sugar.
Brazil’s Challenges with Crop Damage
Although Brazil saw a higher sugarcane crush, it’s important to note that recent drought and heat have led to crop damage. Reports indicated that fire outbreaks affected around 80,000 hectares in Sao Paulo, the nation’s largest sugar-producing state. Estimates suggest that about 5 MMT of sugar cane may have been lost. Consequently, Conab, Brazil’s agricultural forecasting entity, lowered its sugar production estimate for 2024/25 to 44 MMT from a previous projection of 46 MMT.
India’s Sugar Policies and Export Restrictions
To support domestic sugar prices, India’s Food Ministry has lifted some restrictions on sugar mills producing ethanol for 2024/25. This move may extend India’s sugar export curbs. Since October 2023, India has limited sugar exports to maintain sufficient local supplies. During the 2022/23 season, only 6.1 MMT of sugar was allowed for export, compared to a record 11.1 MMT the previous season. On October 3, the Indian Sugar and Bio-energy Manufacturers Association (ISM) indicated that India might only have 2 MMT available for export next season and has urged the government to reconsider restrictions.
Production Outlook for India and Global Trends
The ISM projected a -2% decrease in India’s 2024/25 sugar production to 33.3 MMT, with anticipated reserves at 8.4 MMT as of September 30. In a contrary forecast, the ISO estimated global sugar production for 2024/25 at 179.3 MMT, down -1.1% from this year’s 181.3 MMT.
USDA’s Global Projections
In its recent bi-annual report released on November 21, the USDA expects global sugar production to rise by +1.5% to a record 186.619 MMT in 2024/25. The report also predicts human sugar consumption growth of +1.2% to reach 179.63 MMT, alongside a forecast decline of -6.1% in global sugar ending stocks to 45.427 MMT.
On the date of publication, Rich Asplund did not hold any positions in the mentioned securities. This article is meant for informational purposes only. For further details, refer to the Barchart Disclosure Policy here.
The views expressed here are those of the author and do not necessarily reflect the opinions of Nasdaq, Inc.
