Sugar prices dropped on Friday after reaching a two-week high earlier. The decline was attributed to weather forecasts predicting widespread rain in Brazil next week, which could ease dryness concerns and improve sugarcane yields, reports Nasdaq.com.
On the New York exchange, May world sugar futures fell by 0.18 cents, or 0.94%, while May London white sugar futures declined by $1.40, or 0.26%.
Earlier this week, sugar prices surged to a two-week peak due to concerns over reduced global sugar production. According to a Thursday report from Unica, Brazil’s Center-South region produced 39.822 million metric tons (MMT) of sugar through February, a 5.6% decrease compared to last year. Additionally, the Indian Sugar and Bio-energy Manufacturers Association lowered its sugar production forecast for 2024/25 to 26.4 MMT, down from its previous estimate of 27.27 MMT in January, citing reduced cane yields.
Meanwhile, the International Sugar Organization (ISO) increased its global sugar deficit projection for 2024/25 to 4.88 MMT, up from its previous estimate of 2.51 MMT in November. This shift marks a tightening market compared to the 2023/24 surplus of 1.31 MMT. The ISO also cut its forecast for 2024/25 global sugar production to 175.5 MMT from 179.1 MMT. However, Green Pool Commodity Specialists predicted that the sugar market would transition into a surplus of 2.7 MMT in 2025/26, following an estimated deficit of 3.7 MMT in 2024/25.
Last week, sugar prices hit a seven-week low due to signs of weakening demand. Sugar traders Wilmar International Ltd and Sucres et Denrees SA took delivery of a record 1.7 MMT of raw sugar against the March New York futures contract, which expired on February 28. Large deliveries often indicate a lack of alternative buyers, pressuring prices downward.
Further bearish signals emerged from Brazil, where consultant Datagro projected that sugar production in the Center-South region would increase by 6% year-over-year to 42.4 MMT in 2025/26. Additionally, sugar trader Czarnikow forecasted that Brazil’s sugar production would reach a record 43.6 MMT in 2025/26, as sugar continues to be more profitable than ethanol.
India’s sugar market also saw developments impacting global prices. On January 20, the Indian government announced it would allow sugar mills to export 1 MMT of sugar this season, easing restrictions put in place in 2023. India had limited sugar exports since October 2023 to ensure sufficient domestic supply. The India Sugar Mills Association (ISMA) now estimates that the country’s sugar production for 2024/25 will fall by 17.5% year-over-year to a five-year low of 26.4 MMT.
In Thailand, sugar production is expected to increase significantly. The Office of the Cane and Sugar Board projected that the country’s 2024/25 output will rise by 18% year-over-year to 10.35 MMT, up from 8.77 MMT in the previous season. Thailand, the world’s third-largest sugar producer and second-largest exporter, could see its rising production weigh on global sugar prices.
Brazil’s sugar industry also faced challenges due to last year’s drought and extreme heat, which led to fires damaging sugar crops in Sao Paulo, the country’s top sugar-producing state. Green Pool Commodity Specialists estimated that as much as 5 MMT of sugarcane may have been lost. As a result, Brazil’s government crop forecasting agency, Conab, reduced its 2024/25 sugar production estimate to 44 MMT from an earlier forecast of 46 MMT.
The USDA’s bi-annual report, released on November 21, 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 was also expected to rise by 1.2% to a record 179.63 MMT, while global sugar stocks were forecast to decline by 6.1% to 45.427 MMT.
