Sugar Prices Edge Up Amid Mixed Global Supply Trends
Weak Dollar Provides Some Support
March NY world sugar #11 (SBH25) is trading up by +0.10 (+0.46%), while March London ICE white sugar #5 (SWH25) has climbed +0.30 (+0.05%). Today’s slight increase in sugar prices has been bolstered by a weak dollar (DXY00). However, earlier this week, prices faced pressure, dropping to their lowest level in 1-3/4 months after the dollar index surged to a 1-year high.
Potential Long Liquidation in London Sugar
A hefty investment position held by funds in London sugar may lead to increased selling and further price declines. Last Friday’s Commitment of Traders (COT) report revealed that funds increased their net-long positions in London sugar by 1,457 contracts, raising their total to 44,261. This marks the highest level since record-keeping began in 2011.
Bearish Outlook for Thailand’s Sugar Production
Concerns loom over sugar prices due to expectations of higher production from Thailand. The country’s Office of the Cane and Sugar Board announced on October 29 that it anticipates a production increase of +18% year-over-year, reaching 10.35 million metric tons (MMT) in the 2024/25 season, up from 8.77 MMT in 2023/24. Thailand remains the world’s third-largest sugar producer and second-largest exporter.
Positive Rains in India May Lower Prices
Optimism for India’s sugar crop is growing, as the Indian Meteorological Department reported 934.8 mm of rain during the monsoon season, significantly above the long-term average. This rainfall marks the highest total in four years and runs from June through September.
Brazil Faces Crop Setbacks
In a contrasting development, a report from Unica highlighted a -24.3% year-over-year decline in sugar output from Brazil’s Center-South region during the second half of October, totaling 1.785 MMT. On the other hand, cumulative production for the 2024/25 season through October has increased by +0.3% to 37 MMT. Challenges such as recent drought and severe heat have resulted in fires damaging sugar crops in Sao Paulo. Up to 80,000 hectares of sugarcane have been impacted, with estimates suggesting the loss of as much as 5 MMT due to these fires.
India’s Export Policies in Focus
India’s Food Ministry has lifted restrictions on the production of ethanol from sugarcane for the 2024/25 year, which may extend the country’s sugar export curbs. Since October 2023, India has maintained sugar export restrictions to ensure sufficient domestic supplies. In the previous season, exports were capped at 6.1 MMT, down from a record 11.1 MMT the year prior. The Indian Sugar and Bio-energy Manufacturers Association (ISM) has estimated that India could have only 2 MMT available for export next season.
Global Sugar Deficit Forecasted
In a more global perspective, the International Sugar Organization (ISO) forecasts a sugar deficit of -3.58 MMT for the 2024/25 season, significantly greater than the -200,000 MT deficit projected for 2023/24. Total global sugar production is expected to decline by -1.1% to 179.3 MMT in 2024/25.
USDA’s Projections Offer Mixed Signals
The USDA’s latest report projects a +1.4% increase in global sugar production for 2024/25, reaching a record 186.024 MMT. Meanwhile, human sugar consumption is also anticipated to climb by +0.8%, resulting in a forecast of 178.788 MMT. However, the USDA also indicates that ending stocks could dip by -4.7% to a 13-year low of 38.339 MMT.
On the date of publication, Rich Asplund did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are intended for informational purposes only. For more details, please view the Barchart Disclosure Policy here.
The views and opinions expressed in this article are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.
