Sugar Prices Show Mild Recovery Amidst Global Market Changes
March NY world sugar #11 (SBH25) is up +0.07 (+0.36%), while March London ICE white sugar #5 (SWH25) closed higher by +6.20 (+1.21%).
Today’s sugar prices have increased slightly, stabilizing above last Thursday’s lows, when New York sugar hit a three-month low and London sugar fell to a four-month low. However, the market remains cautious ahead of Unica’s upcoming report on Brazil’s sugar production for early December.
Market Conditions Shaped by India and Brazil
Recent comments from India’s Food Secretary Chopra suggested that India may permit sugar exports if a surplus is confirmed after fulfilling domestic ethanol blending requirements. Currently, India projects a sugar surplus of about 1 million metric tons (MMT) this season.
Additionally, the Brazilian real’s weaknesses, which saw a 1.7% decline on Monday, can motivate Brazil’s sugar producers to increase exports. This currency weakness keeps the market unsettled.
Shifting Supply Outlook Influences Prices
A favorable global supply forecast contributes to downward pressure on sugar prices. On November 21, the International Sugar Organization (ISO) revised its 2024/25 global sugar deficit forecast from -3.58 MMT in August to -2.51 MMT. Furthermore, ISO raised its 2023/24 global sugar surplus estimate to 1.31 MMT from a previous 200,000 MT forecast.
Thailand’s projected growth in sugar production is another factor affecting prices negatively. The Office of the Cane and Sugar Board in Thailand anticipates that the nation’s sugar production will rise by 18% to 10.35 MMT for 2024/25, up from the 8.77 MMT produced in 2023/24.
India’s Output Drops, Balancing Supply
In contrast, a reduction in India’s sugar output may provide some support to prices. The National Federation of India Cooperative Sugar Factories Ltd reported an 18% year-over-year drop, with production totaling 6.1 MMT from October 1 to December 15.
Brazilian Production Declines Provide Some Bullish Signals
Meanwhile, decreasing sugar production from Brazil’s Center-South region offers a bullish aspect. Unica noted a cumulative reduction in sugar output of 3.7% year-over-year, totaling 39.361 MMT for the 2024/25 season through November.
The impact of drought and excessive heat has been significant. Earlier this year, fires damaged sugar crops in Brazil’s primary sugar-producing state of São Paulo, affecting around 80,000 hectares. Reports indicate that as much as 5 MMT of sugar cane may have been lost, prompting Brazil’s government to reduce its sugar production forecast for 2024/25 from 46 MMT to 44 MMT.
India’s Restrictions Continue to Affect the Market
In a supportive move for sugar prices, India’s Food Ministry lifted restrictions on sugar mills for ethanol production for the 2024/25 year, which may extend sugar export limits in the country. Last December, India restricted sugar exports to stabilize domestic supplies, exporting only 6.1 MMT during the 2022/23 season, a drop from a record 11.1 MMT previously. However, as of October, the Indian Sugar and Bio-energy Manufacturers Association believes that 2 MMT could be available for export next season and has encouraged the government to reconsider its export restrictions.
The Indian Sugar and Bio-energy Manufacturers Association also projected that India’s 2024/25 sugar output might decline by 2% to 33.3 MMT and that the country’s sugar reserves would total 8.4 MMT as of September 30, down from previous estimates of 9.1 MMT.
USDA Forecasts for Global Production and Consumption
In related forecasts, the USDA predicted that global sugar production for 2024/25 could rise by 1.5% year-over-year, reaching a record 186.619 MMT, while human sugar consumption is also expected to increase by 1.2% to a record 179.63 MMT. The data suggests that ending stocks may decrease by 6.1%, totaling 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 is solely for informational purposes. For more information please view the Barchart Disclosure Policy
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
