Sugar Prices Dip Amid Supply Changes and Crop Challenges
March NY world sugar #11 (SBH25) closed down -0.32 (-1.63%) on Monday, while March London ICE white sugar #5 (SWH25) fell -7.10 (-1.38%).
Recent Trends in Sugar Pricing
Moderate losses characterized sugar prices on Monday, continuing a downward trend over the past three months. Notably, NY sugar reached a 3-1/2 month low last Tuesday, and London sugar hit a 2-3/4 year low attributed to improved sugar supply forecasts. The International Sugar Organization (ISO) recently revised its 2024/25 global sugar deficit prediction, decreasing it to -2.51 MMT from an earlier estimate of -3.58 MMT. Meanwhile, the ISO increased its outlook for the 2023/24 global sugar surplus, estimating it at 1.31 MMT, up from an August projection of +200,000 MT.
Production Reports from India
Last Thursday saw a brief rebound in sugar prices, reaching 2-1/2 week highs, due to reports of reduced sugar production in India, the second-largest sugar producer worldwide. The Indian Sugar and Bio-energy Manufacturers Association (ISM) disclosed a -15.5% year-over-year decline in sugar production from October 1 to December 31, totaling 9.54 MMT. This decrease may lead the Indian government to maintain export restrictions, tightening global sugar supplies.
Thailand’s Sugar Outlook
Conversely, projections of increased sugar production in Thailand cast a bearish outlook on sugar prices. The Office of the Cane and Sugar Board in Thailand anticipates an 18% year-over-year increase in sugar production for 2024/25, estimating it at 10.35 MMT, up from 8.77 MMT in the 2023/24 season. Thailand ranks as the third-largest sugar producer and the second-largest sugar exporter globally.
India’s Potential Export Policy Adjustments
India’s Food Secretary, Chopra, stated that the country may permit sugar exports if a surplus occurs after domestic ethanol blending needs are fulfilled. The government expects a sugar surplus of about 1 MMT this season.
Weather-Related Challenges in Brazil
Brazil has faced severe weather challenges, including drought and heat, which damaged sugar crops in the key producing region of São Paulo. The industry group Orplana reported that fires impacted up to 80,000 hectares of sugarcane, with losses estimated at around 5 MMT. Consequently, Brazil’s government agency, Conab, lowered its 2024/25 sugar production forecast to 44 MMT, down from 46 MMT, citing reduced yields. As of December 27, UNICA reported that sugar output in the Center-South region was down -5.1% year-over-year to 39.711 MMT due to fewer operational sugar mills.
Government Actions in India
On August 30, India’s Food Ministry eased restrictions on sugar mills producing ethanol, which may prolong the country’s sugar export limitations. Starting in October 2023, India imposed sugar export restrictions to safeguard domestic supplies. During the 2022/23 season, exports were limited to 6.1 MMT after a record-high of 11.1 MMT the previous year. However, ISM estimates India might have 2 MMT available for export next season and encourages the government to lift restrictions.
Forecasts and Projections
The ISM predicted India’s sugar production for 2024/25 will decrease by -2% year-over-year to 33.3 MMT, with reserves expected at 8.4 MMT by September 30. The USDA, in its November 21 report, projected global sugar production for 2024/25 could climb by 1.5% to a record 186.619 MMT, while human sugar consumption is forecasted to increase by 1.2% to reach 179.63 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.
