Sugar Prices Show Mixed Trends Amid Production Forecasts

On Thursday, July NY world sugar #11 (SBN25) closed down -0.09 (-0.52%), while August London ICE white sugar #5 (SWQ25) ended up +1.00 (+0.20%). This mixed performance reflects a complex market influenced by varied production forecasts.

Brazil’s Production Outlook Weighs on Prices

Sugar prices settled with July NY sugar reaching a 3-3/4 year low. This decline comes as expectations for higher sugar production in Brazil put downward pressure on prices. On Wednesday, Unica reported that Brazil’s Center-South sugar production for the first half of April increased by +1.3% year-over-year to 731,000 metric tons (MT). This report also marks the first update for the 2025/26 crop year.

Conab projected Brazil’s sugar output for 2025/26 would rise +4.0% year-over-year to 45.875 million metric tons (MMT).

Demand Weakness and Market Reactions

Bloomberg highlighted that Louis Dreyfus was the sole trader to deliver raw sugar to settle the NY May sugar futures that expired on Wednesday, a sign of weak demand. However, prices rebounded somewhat on Thursday as short covering emerged, propelled by a statement from India’s Food Secretary, Chopra. He indicated that India’s sugar exports for the 2024/25 season may total only 800,000 MT, down from earlier expectations of 1 MMT.

Global Production Pressures

Over the past month, sugar prices have been pressured by signs of increased global production. Last Wednesday, the USDA’s Foreign Agricultural Service predicted Brazil’s 2025/26 sugar production would rise by +2.3% year-over-year to 44.7 MMT, up from 43.7 MMT in the previous season. Additional forecasts suggest abundant rainfall in India could lead to a bumper sugar crop; the Indian Ministry of Earth Sciences anticipates a monsoon this year that yields 105% of the long-term average from June through September.

Concerns about Supply and Export Limits

Consultants Datagro projected on March 12 that Brazil’s Center-South sugar production for 2025/26 would increase by +6% year-over-year to 42.4 MMT. Moreover, Green Pool Commodity Specialists expect the global sugar market to shift to a surplus of +2.7 MMT in the 2025/26 crop year, contrasting with an earlier deficit of -3.7 MMT in 2024/25.

On January 20, the Indian government announced it would allow its sugar mills to export 1 MMT of sugar this season, easing restrictions imposed to maintain domestic supply. This contrasts with 6.1 MMT exported in the previous season, down from a record 11.1 MMT.

Bearish Factors from Other Regions

Concerns about sugar production in Thailand also add to downward pressure. Last Friday, Thailand’s Office of the Cane and Sugar Board reported a +14% year-over-year increase in sugar production for 2024/25, reaching 10.00 MMT. Thailand ranks as the world’s third-largest sugar producer and second-largest exporter.

Contrasting Data from India and Brazil

Support for sugar prices came from ISMA’s report indicating that India’s sugar production fell -18% year-on-year to 25.5 MMT from October 1 to April 15. Additionally, Unica noted that cumulative Brazil Center-South sugar output through March declined by 5.3% year-over-year to 40.169 MMT.

The Indian Sugar and Bio-Energy Manufacturers Association adjusted its 2024/25 production forecast downward to 26.4 MMT, citing lower cane yields. Meanwhile, the International Sugar Organization raised its 2024/25 global sugar deficit forecast to -4.88 MMT, indicating a tighter market compared to a surplus of 1.31 MMT in 2023/24.

Impact of Climate on Production

Last year, drought and excessive heat caused significant damage to sugar crops, particularly in Brazil’s top sugar-producing state of São Paulo. Green Pool noted that around 5 MMT of sugar cane may have been lost due to fires. Conab’s recent projections indicate a -3.4% year-over-year decline in Brazil’s sugar production for 2024/25, estimating output at 44.118 MMT.

The USDA forecasted in its November report that global sugar production for 2024/25 could increase by +1.5% year-over-year to a record 186.619 MMT, with human consumption expected to rise +1.2% to 179.63 MMT. Global ending stocks are projected to decline by -6.1% 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.
here.

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