Sugar Prices Fall as Brazil Increases Production Estimates

As of today, May NY world sugar #11 (SBK25) has decreased by -0.28 (-1.57%), while August London ICE white sugar #5 (SWQ25) is down -8.20 (-1.62%). Sugar prices are experiencing a decline, marking the lowest level for nearest-futures in 2.5 years. This drop is primarily driven by an increase in Brazil’s projected sugar production, which was raised by Conab to 45.9 million metric tons (MMT) for the 2025/26 season, up from an earlier estimate of 44.1 MMT.

Weak Demand and Global Production Increase

Recent reports suggest that weak sugar demand is contributing to the falling prices. Green Pool Commodity Specialists indicated that a significant volume of outstanding contracts in NY May sugar futures set to expire on Wednesday points to a large delivery, signaling its weak demand. This negativity has compounded over the last month, exacerbated by forecasts of increased global sugar output.

Specifically, the USDA’s Foreign Agricultural Service (FAS) recently estimated Brazil’s sugar production for 2025/26 to rise by 2.3% year-over-year to 44.7 MMT, up from 43.7 MMT last season. Moreover, India’s weather forecast anticipates a robust monsoon season, which could lead to a bumper sugar crop; the Ministry of Earth Sciences predicts rainfall will exceed the long-term average by 5% this year, consistent with historical patterns from June through September.

Global Supply Dynamics Impacting Prices

On a concerning note for sugar prices, Datagro projected on March 12 that Brazil’s Center-South sugar production for 2025/26 would increase by 6% year-over-year to reach 42.4 MMT. Additionally, Green Pool Commodity Specialists reported on February 5 that the global sugar market is set to transition from a deficit of 3.7 MMT in the 2024/25 crop year to a surplus of 2.7 MMT in the 2025/26 crop year.

India’s recent decision to permit its sugar mills to export 1 MMT this season, as announced on January 20, further underscores the easing of previous export restrictions that had been in place since October 2023. For context, India limited sugar exports to just 6.1 MMT during the 2022/23 season after allowing a record 11.1 MMT in the preceding year. However, projections for India’s 2024/25 sugar production suggest a decline of 17.5% year-over-year to a five-year low of 26.4 MMT.

Forecasts from Thailand and Brazil

The outlook from Thailand adds to the bearish sentiment surrounding sugar prices. Thailand’s Office of the Cane and Sugar Board recently reported a 14% year-over-year rise in sugar production for the 2024/25 season, totaling 10.00 MMT. As the world’s third-largest sugar producer and second-largest exporter, Thailand’s output can significantly influence global markets.

Support for sugar prices does exist, stemming from April 17 data showing that India’s sugar production for the season up to April 15 reached 25.5 MMT, a decline of 18% from the previous year. Similarly, Unica reported on April 14 a 5.3% annual dip in the cumulative sugar output from Brazil’s Center-South region through March, amounting to 40.169 MMT.

Meanwhile, the International Sugar Organization (ISO) recently adjusted its forecast, raising the global sugar deficit projection for 2024/25 to 4.88 MMT. This contrasts with a previous surplus estimate of 1.31 MMT for 2023/24, suggesting a tighter future market. The ISO also cut its global sugar production forecast for 2024/25 to 175.5 MMT.

Weather Challenges in Brazil

Brazilian sugar crops faced challenges last year from drought and extreme heat, which led to fires in the country’s primary sugar-producing state of Sao Paulo. Green Pool noted significant losses, estimating around 5 MMT of sugar cane may have been destroyed due to these fires. In a recent projection, Conab noted Brazil’s sugar production for 2024/25 is expected to decrease by 3.4% to 44.118 MMT, attributing this decline to lower sugarcane yields affected by weather conditions.

The USDA’s bi-annual report released on November 21 forecasts a 1.5% rise in global sugar production for 2024/25, reaching a record 186.619 MMT, alongside a 1.2% increase in global human sugar consumption to a record 179.63 MMT. Ending stocks are expected to decline by 6.1% to 45.427 MMT.

On the date of publication, Rich Asplund did not hold any positions in the securities mentioned in this article. All data is provided for informational purposes. Please view the Barchart Disclosure Policy for more details.

The views expressed here represent the author’s opinions and do not necessarily reflect those of any organization.