Sugar Prices Rise Amidst Decreased Global Production Forecasts

On Thursday, May NY world sugar #11 (SBK25) closed up +0.31 (+1.57%), while May London ICE white sugar #5 (SWK25) increased by +6.60 (+1.18%).

Sugar prices experienced moderate gains on Thursday, closing just below Tuesday’s significant highs. Prices have surged over the past two weeks, with NY sugar reaching a three-week high and London sugar hitting a three-and-a-half month high, driven by indications of declining global sugar production.

Recent Production Reports Fuel Market Changes

Last Thursday, Unica reported that Brazil’s Center-South sugar output for the 2024/25 season fell by 5.6% year-over-year to 39.822 million metric tons (MMT) through February. Additionally, the Indian Sugar and Bio-energy Manufactures Association lowered its forecast for India’s 2024/25 sugar production from 27.27 MMT to 26.4 MMT, attributing this drop to lower cane yields.

A stronger Brazilian real (^USDBRL) also provided support for sugar prices. The real reached a four-and-a-half month high against the dollar, which reduces incentives for Brazilian producers to export their sugar.

Shifts in Global Sugar Supply

On March 6, the International Sugar Organization (ISO) revised its forecast for the global sugar deficit in 2024/25 to -4.88 MMT, significantly higher than the -2.51 MMT forecasted in November. This marks a notable market shift from the 2023/24 global sugar surplus of 1.31 MMT. Correspondingly, the ISO adjusted its global sugar production forecast for 2024/25 down to 175.5 MMT from 179.1 MMT projected earlier. Green Pool Commodity Specialists also predict a change in the market, forecasting a global surplus of +2.7 MMT for the 2025/26 crop year after estimating a deficit of -3.7 MMT for the upcoming season.

Bearish Signals from Brazil and India

Conversely, a projection from consultant Datagro indicated that Brazil’s Center-South sugar production might rise by 6% year-over-year to 42.4 MMT for the 2025/26 season. Additionally, sugar trader Czarnikow estimated that Brazil’s sugar production could reach a record 43.6 MMT in the same period, citing profitability advantages for sugar over ethanol.

On the bearish side for sugar, the Indian government announced on January 20 that it would allow its mills to export 1 MMT of sugar this season, lifting previous restrictions implemented to maintain domestic supply. In the 2022/23 season, India allowed only 6.1 MMT of sugar exports compared to a record of 11.1 MMT in the prior season. However, the India Sugar Mills Association (ISMA) anticipates a 17.5% decline in India’s 2024/25 sugar production, predicting a five-year low of 26.4 MMT.

Prospects for Sugar Production in Thailand and Brazil

Thailand’s prospects for increased sugar production also present a bearish factor for prices. The Office of the Cane and Sugar Board of Thailand projected an 18% year-over-year increase in sugar production for 2024/25 to 10.35 MMT, up from 8.77 MMT in the previous season. As the world’s third-largest sugar producer and second-largest exporter, Thailand’s growth could impact global prices.

Last year’s drought and extreme heat led to devastating fires in Brazil, particularly in its leading sugar-producing state, Sao Paulo, causing the loss of as much as 5 MMT of sugar cane. Brazil’s government crop forecasting agency, Conab, adjusted its 2024/25 sugar production estimate down to 44 MMT from a prior forecast of 46 MMT, reflecting lower sugarcane yields due to adverse weather conditions.

Global Sugars Production and Consumption Trends

The USDA, in its bi-annual report released on November 21, indicated that global sugar production for 2024/25 is expected to rise by 1.5% year-over-year to a record 186.619 MMT. At the same time, global human sugar consumption is projected to increase by 1.2% year-over-year to a record 179.63 MMT. Furthermore, the USDA forecasted that global sugar ending stocks would decrease by 6.1% year-over-year to 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 here.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.