Sugar prices reached a one-and-a-half-week high today, rising moderately due to concerns over tighter global supplies. The Indian Sugar and Bio-Energy Manufacturers Association reduced its 2024/25 sugar production forecast to 26.4 million metric tons (MMT) from its January estimate of 27.27 MMT, citing lower cane yields, reports Nasdaq.com.
May NY world sugar #11 (SBK25) is up 0.41 (+2.20%), while May London ICE white sugar #5 (SWK25) has increased by 13.20 (+2.52%).
The International Sugar Organization (ISO) raised its 2024/25 global sugar deficit forecast to 4.88 MMT from its previous estimate of 2.51 MMT, signaling a tightening market compared to the 2023/24 global sugar surplus of 1.31 MMT. The ISO also lowered its global sugar production forecast for 2024/25 to 175.5 MMT from the earlier estimate of 179.1 MMT. Green Pool Commodity Specialists projected that the global sugar market will shift to a surplus of 2.7 MMT in the 2025/26 crop year after an estimated deficit of 3.7 MMT in 2024/25.
Last week, sugar prices dropped to six-week lows due to weak demand, as traders Wilmar International Ltd and Sucres et Denrees SA took record delivery of 1.7 MMT of raw sugar against the March NY futures contract that expired on February 28. Large deliveries typically indicate an oversupply and a bearish outlook for prices.
Additionally, sugar trader Czarnikow projected on February 27 that Brazil’s 2025/26 sugar production would reach a record 43.6 MMT, as sugar remains more profitable than ethanol production.
India’s decision to allow 1 MMT of sugar exports this season, announced on January 20, also weighed on prices. The country had restricted sugar exports since October 2023 to maintain domestic supply. During the 2022/23 season, India permitted exports of only 6.1 MMT after allowing a record 11.1 MMT in the previous season. However, the Indian Sugar Mills Association (ISMA) projects that India’s 2024/25 sugar production will decline by 15% year-over-year to a five-year low of 27.27 MMT.
Higher sugar production in Thailand is another factor putting pressure on prices. Thailand’s Office of the Cane and Sugar Board projected on October 29 that the country’s 2024/25 sugar production would rise by 18% year-over-year to 10.35 MMT, up from 8.77 MMT in 2023/24. Thailand is the world’s third-largest sugar producer and second-largest exporter.
Meanwhile, drought and excessive heat last year caused fires in Brazil, damaging sugar crops in Sao Paulo, the country’s top sugar-producing state. Green Pool Commodity Specialists estimated that up to 5 MMT of sugar cane may have been lost due to the fires. Brazil’s government crop forecasting agency, Conab, cut its 2024/25 sugar production estimate on November 21 from 46 MMT to 44 MMT, citing lower yields. Unica reported that cumulative 2024/25 Center-South sugar output through mid-February was down 5.6% year-over-year at 39.812 MMT.
In its bi-annual report released on November 21, the U.S. Department of Agriculture (USDA) projected that global sugar production for 2024/25 would increase by 1.5% year-over-year to a record 186.619 MMT. Global human sugar consumption is expected to rise by 1.2% year-over-year to a record 179.63 MMT. The USDA also forecasted that global sugar ending stocks for 2024/25 would decline by 6.1% year-over-year to 45.427 MMT.
Important News:
Season 2024-25: ISMA revises net sugar production estimates to 264 lakh tonnes
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