Global Sugar Prices Drop Amid Market Concerns and Production Estimates

May NY world sugar #11 (SBK25) today saw a decline of -0.12 (-0.64%), while May London ICE white sugar #5 (SWK25) dropped by -3.90 (-0.72%).

Today’s sugar prices are lower, reaching a four-week low. Fears stemming from a global trade war have triggered declines in equity markets, contributing to a risk-off sentiment in asset markets and negatively impacting sugar prices. Additionally, a drop in WTI crude oil (CLK25) to a four-year low further pressured sugar prices. With weaker crude prices, ethanol prices are also declining, which may lead sugar mills to favor sugar production over ethanol, increasing sugar supplies in the market.

Commodity Bulletin: From crude oil to coffee, this FREE newsletter is for industry pros and rookies alike

The Brazilian real (^USDBRL) has weakened, adding to the downward pressure on sugar prices. Today, the real fell to a two-and-a-quarter month low against the dollar, motivating sugar producers in Brazil to engage in export selling.

Despite these bearish indicators, signs of dwindling global sugar production lend some support to prices. On March 12, the Indian Sugar and Bio-energy Manufacturers Association revised its forecast for 2024/25 India sugar production to 26.4 million metric tons (MMT), down from 27.27 MMT estimated in January, citing lower cane yields. Last Thursday, Unica reported that as of mid-March, Brazil’s Center-South sugar output for 2024/25 had dropped 5.3% year-on-year to 39.983 MMT. Additionally, sugar trader Czarnikow reduced its Brazil 2025/26 sugar production estimate to 42 MMT from a previously estimated 43.6 MMT in February.

Meanwhile, the International Sugar Organization (ISO) raised its forecast for the global sugar deficit in 2024/25 to -4.88 MMT from a previous estimate of -2.51 MMT in November, indicating a narrowing market compared to the 2023/24 global sugar surplus of 1.31 MMT. The ISO has also projected a reduction in global sugar production to 175.5 MMT for 2024/25, down from a November forecast of 179.1 MMT.

On the other hand, some forecasts suggest a more optimistic outlook. Consultant Datagro on March 12 anticipated that Brazil’s Center-South sugar production for 2025/26 would increase by 6% year-on-year to 42.4 MMT. Additionally, Green Pool Commodity Specialists projected that the global sugar market will shift from a deficit of -3.7 MMT in 2024/25 to a surplus of +2.7 MMT in the 2025/26 crop year.

India’s sugar market faces its own challenges. The Indian government announced on January 20 that it would permit sugar mills to export 1 MMT of sugar this season, loosening restrictions initially imposed in 2023 to maintain domestic supplies. In the previous season, India only allowed mills to export 6.1 MMT of sugar, significantly down from a record 11.1 MMT in the prior season. Nevertheless, the India Sugar Mills Association (ISMA) predicts that the country’s 2024/25 sugar output will fall by 17.5% year-on-year to a five-year low of 26.4 MMT.

The outlook for sugar production in Thailand is also bearish, as the Office of the Cane and Sugar Board projected an 18% year-on-year increase in 2024/25 sugar production to 10.35 MMT, following an output of 8.77 MMT in the 2023/24 season. Thailand stands as the world’s third-largest sugar producer and second-largest exporter.

In Brazil, drought and extreme heat last year caused significant fires harming sugar crops in the top-producing state of São Paulo. Green Pool Commodity Specialists noted that as much as 5 MMT of sugar cane might have been lost due to these fires. Subsequently, Conab, Brazil’s government crop forecasting agency, revised its forecast for 2024/25 Brazil sugar production down from 46 MMT to 44 MMT, citing lower sugarcane yields.

The USDA’s biannual report released on November 21 projected an increase of 1.5% year-on-year in global 2024/25 sugar production, reaching a record 186.619 MMT. In tandem, global human sugar consumption is expected to climb by 1.2% year-on-year to a record 179.63 MMT. The USDA also forecasted a 6.1% year-on-year decline in 2024/25 global sugar 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 is 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.