July Sugar Prices Decline Amid Increased Global Supply Insights

On Friday, July NY world sugar #11 (SBN25) closed up +0.04 (+0.23%), while August London ICE white sugar #5 (SWQ25) fell by -4.10 (-0.83%). Sugar prices continued their downward trend from the previous month, with July NY sugar reaching a 3¾-year low and London sugar hitting a 2-week low. However, later in the day, NY sugar rebounded slightly, benefitting from a weaker dollar (DXY00) that prompted short covering in sugar futures.

Brazilian Production Forecasts Weigh on Prices

The expectation of increased sugar production in Brazil is contributing to the decline in prices. Unica reported on Wednesday that sugar production in Brazil’s Center-South region rose by +1.3% year-over-year, totaling 731,000 MT for the first half of April. This report marks the first analysis for the 2025/26 season. Additionally, Conab has forecasted a 4.0% year-over-year increase in Brazil’s sugar production for 2025/26, expecting it to reach 45.875 million metric tons (MMT).

Bloomberg noted on Thursday that Louis Dreyfus was the sole trader to deliver raw sugar for settling the recently expired NY May sugar futures. Approximately 1.5 MMT was delivered, marking the fifth-largest delivery for this contract in five years, according to StoneX. Such a significant delivery signals weaker demand for sugar overall.

Global Sugar Supply Trends and Their Impact

Further predictions of rising global sugar output are also bearish for prices. The USDA’s Foreign Agricultural Service (FAS) recently projected Brazil’s 2025/26 sugar production to grow by +2.3% year-over-year, increasing to 44.7 MMT from 43.7 MMT in the previous season. The Indian Ministry of Earth Sciences forecasts an above-normal monsoon for this year, projecting total rainfall to be 105% of the long-term average, which could lead to a bumper sugar crop. The monsoon season in India extends from June through September.

On another note, 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. Green Pool Commodity Specialists also indicated that the global sugar market may shift to a surplus of +2.7 MMT in the 2025/26 crop year from a projected deficit of -3.7 MMT in 2024/25.

India and Thailand Factors in Sugar Market

A bearish factor emerged when the Indian government stated it would allow sugar mills to export 1 MMT this season, easing previous restrictions on sugar exports imposed in 2023. From October 2022 to September 2023, India limited exports to 6.1 MMT after a record high of 11.1 MMT in the 2021/22 season. However, the Indian Sugar Mills Association (ISMA) estimates a significant drop in India’s 2024/25 sugar production, expecting it to decrease by -17.5% year-over-year to 26.4 MMT. Indian Food Secretary Chopra indicated on Thursday that India’s 2024/25 sugar exports may only reach 800,000 MT, lower than previous expectations.

In Thailand, the sugar industry appears to be on an upward trajectory. The Office of the Cane and Sugar Board reported last Friday that Thailand’s sugar production for 2024/25 is projected to rise by +14% year-over-year to 10.00 MMT. As the world’s third-largest sugar producer and the second-largest exporter, this increase could further influence global sugar prices.

Recent Crop Damage and Production Reductions

Despite the outlook for increased production, there are signs of lower global sugar output that support prices. Unica’s report on April 14 stated that cumulative sugar output in Brazil’s Center-South region had fallen by 5.3% year-over-year to 40.169 MMT as of March. Furthermore, ISMA revised its 2024/25 sugar production forecast for India down to 26.4 MMT, citing lower cane yields.

In a broader view, the International Sugar Organization (ISO) raised its 2024/25 global sugar deficit forecast to -4.88 MMT from an earlier estimate of -2.51 MMT, indicating a tightening market compared to the global sugar surplus of 1.31 MMT in 2023/24. Additionally, the ISO reduced its global sugar production forecast for 2024/25 to 175.5 MMT from 179.1 MMT.

Challenges from Drought Conditions in Brazil

Last year’s drought and excessive heat resulted in significant damage to sugar crops in Brazil, particularly in the key producing state of Sao Paulo. Green Pool has estimated that around 5 MMT of sugar cane were lost due to fires. Conab has now projected a -3.4% year-over-year decrease in Brazil’s sugar production for 2024/25, forecasting it to fall to 44.118 MMT as a result of lower sugarcane yields.

According to its biannual report released on November 21, the USDA anticipates that global sugar production will increase by +1.5% year-over-year to reach a record 186.619 MMT and expects human sugar consumption to rise by +1.2% year-over-year, also reaching a record at 179.63 MMT. They further forecast a decline of -6.1% year-over-year in global sugar ending stocks 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 are solely for informational purposes. For more information, please view the Barchart Disclosure Policy.

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