Global Sugar Prices Rise Amid Production Forecasts and Crude Strength

On Friday, July NY world sugar #11 (SBN25) rose by +0.28 (+1.60%) to close higher, while August London ICE white sugar #5 (SWQ25) increased by +5.00 (+1.01%). These gains reflect additional momentum following Thursday’s uptick, reaching one-week highs.

The rise in sugar prices can be attributed to strengthening crude oil prices, as WTI crude oil (CLM25) climbed over +1% to a 1-1/2 week high. Increased crude prices favor ethanol production, potentially causing sugar mills worldwide to redirect cane toward ethanol rather than sugar, consequently reducing sugar supplies.

Recent Trends in Sugar Production

Last Friday, July NY sugar hit a 3-3/4 year nearest-futures low, while London sugar fell to a 3-1/2 month low earlier in the week, driven by expectations of higher sugar production in Brazil. Recent data from Unica highlighted that Brazil’s Center-South sugar production increased by +1.3% year-over-year for the first half of April, reaching 731,000 MT. This report marks the initial data for the 2025/26 season. Additionally, last Tuesday, Conab projected Brazil’s sugar production for 2025/26 to rise +4.0% year-over-year to 45.875 MMT.

The forecast for more significant global sugar output presents bearish pressures on prices. On Tuesday, the USDA’s Foreign Agricultural Service (FAS) estimated that India’s 2025/26 sugar production would surge by +26% year-over-year to 35 MMT, due to favorable monsoon rains and increased acreage. As of April 23, Brazil’s sugar production was anticipated to climb by +2.3% year-over-year to 44.7 MMT from the previous season’s 43.7 MMT.

Impact of India’s Monsoon and Production Forecasts

Increasing expectations of abundant rainfall in India are likely to further suppress sugar prices. On April 15, the Ministry of Earth Sciences projected above-normal monsoon conditions, estimating total rainfall at 105% of the long-term average. Monsoon season typically runs from June through September.

Notably, on January 20, the Indian government announced it would permit sugar mills to export 1 MMT of sugar this season, easing prior restrictions placed in 2023. Last season, India exported only 6.1 MMT of sugar, down from a record 11.1 MMT earlier. Yet, the ISMA anticipates that India’s 2024/25 sugar production may decline by -17.5% year-over-year to a five-year low of 26.4 MMT. Further, Food Secretary Chopra indicated last Thursday that anticipated sugar exports for 2024/25 might only be 800,000 MT, lower than earlier predictions.

Production Outlook in Thailand and Brazil

In contrast, an increase in sugar production in Thailand is contributing to the bearish sentiment for sugar prices. Last Friday, Thailand’s Office of the Cane and Sugar Board reported a +14% year-over-year rise in 2024/25 sugar production to 10.00 MMT, positioning Thailand as the world’s third-largest sugar producer and the second-largest exporter.

Despite expectations for higher production, some indicators show potential support for prices. Unica reported that cumulative sugar output in Brazil’s Center-South through March decreased by 5.3% from the previous year to 40.169 MMT. Similarly, the Indian Sugar and Bio-energy Manufacturers Association revised its 2024/25 production forecast down to 26.4 MMT due to reduced cane yields.

Global Market Concerns and Forecasts

The International Sugar Organization (ISO) updated its outlook on March 6, raising the global sugar deficit forecast for 2024/25 to -4.88 MMT from -2.51 MMT, indicating a tightening market compared to the previous year’s surplus of 1.31 MMT. The ISO also revised its global production forecast down to 175.5 MMT from 179.1 MMT.

Last year’s drought and heat in Brazil led to significant crop damage, especially in São Paulo, the leading sugar-producing state. Green Pool Commodity Specialists noted that fires may have destroyed as much as 5 MMT of sugar cane. In a recent projection, Conab estimated Brazil’s sugar production for 2024/25 could decrease by -3.4% year-over-year to 44.118 MMT, primarily due to lower yields caused by adverse weather conditions.

The USDA’s bi-annual report released on November 21 forecasts global sugar production for 2024/25 to increase by +1.5% year-over-year to a record 186.619 MMT. The USDA also estimates that human sugar consumption will rise by +1.2% year-over-year to a new high of 179.63 MMT, along with a -6.1% decrease in global 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.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.