Sugar Prices Dip Amid Mixed Production Forecasts
Market Movements Reflect Changing Supply Estimates
March NY world sugar #11 (SBH25) closed down -0.02 (-0.09%) on Friday, while March London ICE white sugar #5 (SWH25) fell -0.20 (-0.04%).
On Friday, sugar prices retreated from earlier gains, influenced by a negative carryover from Thursday. The International Sugar Organization (ISO) adjusted its 2024/25 global sugar deficit forecast upward, while its surplus estimate for 2023/24 was revised higher.
Initially, sugar prices rose on Friday due to a more than +1% rally in crude oil prices (CLF25), reaching a two-week high. Higher crude prices tend to benefit ethanol production, which may encourage sugar mills to divert more sugarcane for ethanol rather than sugar, potentially reducing sugar supplies.
Earlier in the week, sugar prices had dipped to one-week lows after the ISO reduced its 2024/25 global sugar deficit forecast from -3.58 MMT in August to -2.51 MMT. Conversely, it increased the estimated global sugar surplus for 2023/24 to 1.31 MMT, a significant jump from the prior estimate of +200,000 MT.
On Tuesday, sugar prices surged to two-week highs when Wilmar International predicted a substantial increase in closed sugar mills in Brazil—from 38 to over 100 this month—significantly cutting sugar output. In Brazil, sugar mills typically halt processing during the wet months of December and January, but heavy rains have closed them earlier this month.
However, a bullish outlook for Thailand’s sugar production may weigh on sugar prices. Thailand’s Office of the Cane and Sugar Board anticipates a +18% year-on-year increase in sugar production for 2024/25, forecasting 10.35 MMT. In the previous 2023/24 season, Thailand produced 8.77 MMT, making it the third-largest sugar producer globally.
A recent report from Unica indicated that Brazilian sugar output in the Center-South region fell -24.3% year-on-year in the latter half of October to 1.785 MMT. Yet, cumulative sugar output through October for the 2024/25 season increased +0.3% year-on-year to 37 MMT.
Droughts and excessive heat have exacerbated fires in Brazil’s sugarcane fields, particularly in São Paulo, the leading sugar-producing state. The sugarcane industry group Orplana reported as many as 2,000 fires affecting 80,000 hectares. According to Green Pool Commodity Specialists, up to 5 MMT of sugarcane could be lost. Brazil’s government crop agency, Conab, trimmed its 2024/25 sugar forecast on August 22 to 42 MMT due to lower yields arising from tough weather conditions.
Additionally, Rabobank cut its production outlook from 40.3 MMT to 39.3 MMT, citing similar drought concerns. Datagro also revised its estimate downward to 38.7 MMT from 39.3 MMT, highlighting limitations facing the mills.
On a supportive note for sugar prices, India’s Food Ministry lifted restrictions on sugar mills producing ethanol for the 2024/25 year starting in November, possibly extending India’s sugar export limits. India had imposed a ban on sugarcane use for ethanol production during 2023/24 to bolster reserves. The country has restricted sugar exports since October 2023, permitting only 6.1 MMT for the 2022/23 season, down from a record 11.1 MMT previously.
Though the Indian Sugar and Bio-energy Manufacturers Association (ISM) noted a -1.6% decline in India’s 2023/24 sugar production to 31.4 MMT, it projected a further -2% dip for the 2024/25 season to 33.3 MMT. Furthermore, India’s sugar reserves were estimated at 8.4 MMT on September 30, compared to 9.1 MMT earlier in the year.
In another international insight, the ISO forecasted a global sugar production of 179.3 MMT for 2024/25, which is a decrease of -1.1% from 181.3 MMT in the previous season.
The USDA’s recent bi-annual report projected an increase in global sugar production for 2024/25 by +1.5% to reach a new high of 186.619 MMT. It also estimates a +1.2% rise in global consumption to 179.63 MMT and a -6.1% drop in global ending stocks, anticipated to be 45.427 MMT.
On the date of publication,
Rich Asplund
did not hold any positions in the securities mentioned in this article. All information provided is for informational purposes only. For further details, please view the Barchart Disclosure Policy
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The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
