Sugar Prices Decline Amid Forecasts of Increased Global Production

On July 25, NY world sugar #11 (SBN25) decreased by -0.05 (-0.29%), while August London ICE white sugar #5 (SWQ25) fell by -4.40 (-0.89%).

Current Market Trends

Today, sugar prices continued their month-long decline, with July NY sugar reaching a 3-3/4 year low and London sugar hitting a two-week low. The expectation of higher sugar production in Brazil is contributing to this downward trend. On Wednesday, Unica reported that Brazil’s Center-South sugar production for the first half of April increased by +1.3% year-over-year to 731,000 metric tons (MT). This report marks the beginning of the 2025/26 season forecasts. Conab projected on Tuesday that Brazil’s sugar production for 2025/26 would rise by +4.0% year-over-year to 45.875 million metric tons (MMT).

Demand Indicators

Meanwhile, Bloomberg noted that Louis Dreyfus was the sole trader to deliver raw sugar to settle the NY May sugar futures on Wednesday. Approximately 1.5 MMT of sugar was delivered, making it the fifth-largest settlement in five years according to StoneX. This substantial delivery signals weak demand for sugar.

Global Sugar Production Outlook

Factors contributing to a bearish outlook include increased global sugar output expectations. Last Wednesday, the USDA’s Foreign Agricultural Service predicted a +2.3% year-over-year rise in Brazil’s 2025/26 sugar production to 44.7 MMT. In India, the Ministry of Earth Sciences anticipates above-normal monsoons this year, with rainfall projected at 105% of the long-term average from June to September, supporting a potential bumper crop.

Consultant Datagro projected on March 12 that Brazil’s Center-South sugar production for 2025/26 would rise by +6% year-over-year to 42.4 MMT. Additionally, Green Pool Commodity Specialists forecasted a shift in the global sugar market to a surplus of +2.7 MMT for the 2025/26 crop year, a reversal from the prior season’s deficit of -3.7 MMT.

Export Regulations in India

The Indian government announced on January 20 that sugar mills may export 1 MMT of sugar this season, loosening restrictions imposed in 2023. Prior to this, the country restricted sugar exports since October to ensure sufficient domestic supplies. India exported only 6.1 MMT of sugar during the 2022/23 season, following a record 11.1 MMT the previous season. However, the Indian Sugar Mills Association (ISMA) forecasts India’s sugar production for 2024/25 to decline by -17.5% year-over-year to a five-year low of 26.4 MMT. Furthermore, Indian Food Secretary Chopra indicated on Thursday that sugar exports may only reach 800,000 MT, below earlier predictions of 1 MMT.

Thailand’s Production and Global Impacts

In Thailand, the Office of the Cane and Sugar Board reported a +14% year-over-year increase in sugar production for 2024/25 to 10.00 MMT, which adds further bearish pressure on sugar prices as the country ranks among the largest producers and exporters globally.

Despite these bearish factors, there may be some support for prices, as a report on April 17 indicated that India’s sugar production from October 1 to April 15 totaled 25.5 MMT, down -18% from the same time the previous year.

Forecast and Challenges Ahead

Signs of lower global sugar production could enhance prices. Unica reported on April 14 that cumulative 2024/25 Brazil Center-South sugar output through March had decreased by 5.3% year-over-year to 40.169 MMT. ISMA also reduced its India sugar production forecast for 2024/25 from 27.27 MMT to 26.4 MMT due to lower cane yields.

The International Sugar Organization (ISO) recently raised its deficit forecast for 2024/25 to -4.88 MMT from -2.51 MMT in November, showing a tightening market compared to the 2023/24 global sugar surplus of 1.31 MMT. Additionally, the ISO cut its global sugar production forecast for 2024/25 to 175.5 MMT from 179.1 MMT in November.

Brazil faced challenges last year as drought and excessive heat caused fires that damaged crops in its top sugar-producing state of Sao Paulo, resulting in an estimated loss of 5 MMT of sugar cane. On Thursday, Conab projected Brazil’s 2024/25 sugar production to decrease by -3.4% year-over-year to 44.118 MMT, attributing the decline to lower sugarcane yields from adverse weather.

The USDA’s bi-annual report from November forecasted that global 2024/25 sugar production would rise by +1.5% year-over-year to a record 186.619 MMT, while global human sugar consumption is expected to increase by +1.2% year-over-year to reach 179.63 MMT. Furthermore, global sugar ending stocks are projected to drop by -6.1% year-over-year to 45.427 MMT.

On the date of publication, Rich Asplund did not hold positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For more details, please review the Barchart Disclosure Policy here.

 

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