On Monday, July NY world sugar #11 (SBN25) closed higher at +0.27 (+1.57%), while August London ICE white sugar #5 (SWQ25) remained unchanged due to market closures for the May Day holiday.

Market Dynamics and Recent Trends

Sugar prices experienced a moderate increase, driven by a weaker dollar (DXY00) that encouraged short-covering in sugar futures after last week’s declines.

Production Outlook and Current Data

Last Friday, July NY sugar reached a 3-3/4 year nearest-futures low, with London sugar also hitting a two-week low amid expectations of rising sugar production in Brazil. A report from Unica revealed that Brazil’s Center-South sugar production for the first half of April rose by 1.3% year-over-year to 731,000 MT. This report marked the beginning of data for the 2025/26 season. Additionally, Conab projected a 4.0% year-over-year increase in Brazil’s sugar production for the 2025/26 season, estimating a total of 45.875 MMT.

Delivery and Demand Insights

Bloomberg reported that Louis Dreyfus was the sole trader to deliver raw sugar to settle the NY May sugar futures, with approximately 1.5 MMT delivered—marking the fifth-largest delivery in five years, according to StoneX. Such a large delivery indicates weak demand for sugar.

Global Production Considerations

Expectations for higher global sugar output could pressure prices. On April 23, the USDA’s Foreign Agricultural Service (FAS) forecasted a 2.3% year-over-year increase in Brazil’s 2025/26 sugar production, predicting it would rise to 44.7 MMT. Rain forecasts for India further suggest a bumper crop; India’s Ministry of Earth Sciences projects rainfall to be 105% of the long-term average this monsoon season running from June through September.

Additionally, Datagro projected on March 12 that Brazil’s Center-South sugar production could increase by 6% year-over-year to 42.4 MMT, and Green Pool Commodity Specialists estimated a shift to a sugar surplus of 2.7 MMT for the 2025/26 crop year, contrasting with a deficit of 3.7 MMT for 2024/25.

India’s Export Policies and Production Challenges

In a bearish development, the Indian government announced on January 20 that it would permit sugar mills to export 1 MMT this season, easing the export restrictions imposed in 2023. Despite these moves, the ISMA projects that India’s sugar production for 2024/25 will decline by 17.5% year-over-year to a five-year low of 26.4 MMT. As of April 17, the ISMA noted that sugar production from October 1 to April 15 totaled 25.5 MMT, down by 18% compared to the same period last year. Furthermore, Indian Food Secretary Chopra indicated that India’s exports for 2024/25 might only reach 800,000 MT, below earlier estimates of 1 MMT.

Thailand’s Production Forecast and its Impact

Thailand’s sugar output is also on the rise, with the Office of the Cane and Sugar Board reporting a 14% year-over-year increase for the 2024/25 season, reaching 10.00 MMT. As the world’s third-largest sugar producer, Thailand’s rising production contributes to bearish trends in sugar prices globally.

Balancing Factors in the Market

Conversely, signs of reduced sugar production could support prices. Unica reported a 5.3% year-over-year decrease in Brazil’s cumulative 2024/25 sugar output through March, amounting to 40.169 MMT. Furthermore, on March 12, the Indian Sugar and Bio-energy Manufacturers Association revised its India sugar production forecast down to 26.4 MMT due to lower cane yields.

Lastly, the International Sugar Organization (ISO) raised its 2024/25 global sugar deficit forecast to 4.88 MMT, an increase from the previous estimate of 2.51 MMT. The ISO also adjusted its global sugar production forecast down to 175.5 MMT.

Impact of Climate Conditions

Drought and extreme heat over the past year have damaged sugar crops in Brazil’s leading production state of Sao Paulo. Green Pool Commodity Specialists noted that fires may have resulted in up to 5 MMT of sugar cane loss. Conab projected a 3.4% year-over-year decrease in Brazil’s sugar production for 2024/25 to 44.118 MMT due to lower yields from drought conditions.

USDA Projections for Future Production

In its biannual report, the USDA forecasted that global sugar production for 2024/25 would increase by 1.5% year-over-year, reaching a record 186.619 MMT. They also anticipated a 1.2% increase in global sugar consumption, leading to total consumption of 179.63 MMT. Ending stocks are projected to decline by 6.1% year-over-year to 45.427 MMT.

On the date of publication, Rich Asplund did not hold positions in any mentioned securities. All information provided is for informational purposes only. For more details, refer to our disclosure policy.

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