International Sugar Organization (ISO) released its first assessment of the global 2024-25 sugar balance. ISO’s fundamental view of the global supply/demand situation sees a global deficit (the difference between world consumption and production) in the forthcoming season of 3.580 million tonnes. Meanwhile, the deficit in 2023-24 has reduced to 0.200 mln tonnes from 2.954 mln tonnes in ISO’s third revision in May. World production in 2023-24 is revised higher in this latest assessment, to 181.263 mln tonnes, adding just under 2 mln tonnes from ISO’s previous estimate of 179.270 mln tonnes. The biggest regional change is the production outlook for South America, where production in CS Brazil has shifted more output into the pre-October window. This is also the main driver for the fall in production in 2024-25 to 179.287 mln tonnes, with Brazil output projected to decline by 2.987 mln tonnes compared to this season. World consumption is projected at 182.867 mln tonnes in 2024-25, while the latest revision to the 2023-24 balance sees a figure of 181.463 mln tonnes, down 0.761 mln tonnes from ISO’s previous estimate.
The current deficit projection for 2024/25 already has some credence as the Brazil production outlook for the current CS Brazil harvest has been a source of concern for local associations. Similarly, the outlook for Indian production has been estimated by the Indian Sugar and Bioenergy Manufacturing Association (ISMA) at 33.3 mln tonnes. Meanwhile, the growth in global consumption in 2024/25 of 1.404 mln tonnes or 0.77% is less than last season and close to or below global population growth.
According to the ISO, changes in trade dynamics are key market considerations. The estimated import volume of 68.285 mln tonnes for 2023-24 implies a substantial upward revision from the previous projection of 66.821 mln tonnes. Higher offtake by port refiners, supplying both domestic as well as regional demand for whites sugar, through the processing of imported raws, has been a feature. Meanwhile, the export availability estimate has been increased by 2.220 mln tonnes to 68.562 mln tonnes as Brazil exports continue to return higher than expected monthly totals. For 2024-25, global export availability is estimated at 64.468 mln tonnes, down 4.094 mln tonnes from last season, while the import demand is estimated at 65.537 mln tonnes, down 2.748 mln tonnes as destination buyers have been building stocks with greater supplies of CS Brazil raws over most of the last 8 months. Equally, the white premium arbitrage, which sets the maximum cost bar for refiners who wish to export to the world market, using the futures market expiries, has been falling in recent weeks and months, leading to a less attractive outlook for those operators.
“The sizeable deficit projected for 2024-25 has impacted our outlook for the stock-to-consumption ratio, which has fallen to 52.57%, while our alternative methodology, incorporating processing losses at raw sugar refineries, has returned a figure below 40%, a 13-season low,” ISO said.
The shift in CS Brazil production into the 2023-24 cycle has eliminated the deficit that had been projected previously and higher exports from this region have also resolved the trade deficit. This shift in supply will have repercussions for the 2024-25 balance sheet, both in terms of the overall production/consumption balance, but more acutely for the availability of CS Brazil raws in the off-crop period. The ISO has shifted from a bullish to a neutral to bullish outlook over the next three months.
Global ethanol production in 2024 stands at 117.99 bln litres, up from the 115.7 bln litres recorded in 2023. Major revisions from the ISO’s previous report include an increase in output in India, Brazil, and the US, all due to greater grains-based ethanol production. Meanwhile demand is projected to rise to 113.5 bln litres in 2024, an increase from 108.1 bln litres in 2023. The anticipated growth is primarily attributed to greater usage in Brazil and India. In India, record production and consumption have been achieved so far this year. Grains-based ethanol production has risen significantly and has been crucial to offsetting reduced ethanol production from cane/molasses.
According to the ISO, molasses prices have started to retreat in the major trading hubs in recent months. In Europe, cane molasses prices have dropped below the EUR250/tonne mark. EU beet molasses prices have weakened further, down to EUR152/tonne, in line with softening feed grains prices. Even so, molasses prices remain strong which is a direct result of lower cane and beet crops or policy interventions in the important export origins. India’s export tax and the voluntary sanctions on Russian beet molasses are key factors diminishing trade prospects this season. Softer molasses values in the EU are also indicative of a better beet sugar production outlook in 2024-25, and as a result both the EU and the US are slated to import less in 2024.
The WTO Agriculture Committee is focussing on how negotiations can be resumed, with members unable to agree on how to move ahead in the long-running talks on agriculture following the organisation’s 13th Ministerial Conference (MC13) in February 2024. The Chair highlighted that intensive preliminary work among different groups of members is needed to ensure efficient and productive discussions aimed at narrowing gaps and identifying potential areas of convergence. Brazil lodged a draft decision at a July General Council Meeting which set out a work programme for achieving tangible progress and balanced outcomes in the agriculture negotiations by the 14th Ministerial Conference (MC14), believing the text could serve as a good common basis for negotiations to move ahead after the summer break.
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