Sugar prices continued their upward trend on Thursday, with New York sugar futures hitting a two-week high. The rise comes amid concerns over lower sugar production in Brazil, as industry group Unica reported a 5.6% year-on-year decline in sugar output from the country’s Center-South region, totaling 39.822 million metric tons (MMT) for the 2024/25 season through February, reports Barchart.
Adding to the upward pressure, the Indian Sugar and Bio-Energy Manufacturers Association (ISMA) revised India’s 2024/25 sugar production forecast down to 26.4 MMT, citing lower cane yields. This was a reduction from January’s estimate of 27.27 MMT.
On Thursday, May New York world sugar futures (#11 SBK25) closed up 2.07% at 19.25 cents per pound, while May London white sugar futures (#5 SWK25) rose 1.03% to $538.70 per metric ton.
The International Sugar Organization (ISO) recently raised its 2024/25 global sugar deficit forecast to -4.88 MMT, a significant increase from its previous estimate of -2.51 MMT in November. The revision reflects a tightening market compared to the 1.31 MMT surplus recorded in 2023/24. Additionally, the ISO lowered its 2024/25 global sugar production estimate to 175.5 MMT, down from 179.1 MMT in its November projection.
Looking further ahead, Green Pool Commodity Specialists forecasted on February 5 that the global sugar market will shift to a surplus of +2.7 MMT in the 2025/26 season, compared to an expected -3.7 MMT deficit in 2024/25.
Despite recent gains, sugar prices had fallen to seven-week lows last Thursday, as concerns over weak demand emerged. Wilmar International Ltd and Sucres et Denrees SA, two major sugar traders, took record deliveries of 1.7 MMT of raw sugar against the March New York futures contract that expired on February 28. Large deliveries often indicate a lack of alternative buyers, which can weigh on prices.
On the supply side, Brazil’s 2025/26 sugar production is expected to increase, which could exert downward pressure on prices. Consultant Datagro projected that Brazil’s Center-South sugar production will rise by 6% year-on-year to 42.4 MMT. Sugar trader Czarnikow gave an even higher estimate, forecasting a record 43.6 MMT, as producing sugar is proving to be more profitable than ethanol.
Meanwhile, the Indian government announced on January 20 that it would allow 1 MMT of sugar exports this season, relaxing restrictions imposed since October 2023 to maintain domestic supply. In the 2022/23 season, India allowed 6.1 MMT of sugar exports, down from a record 11.1 MMT in 2021/22. However, ISMA expects India’s 2024/25 sugar production to decline by 17.5% to a five-year low of 26.4 MMT.
In another potential bearish factor for sugar prices, Thailand’s Office of the Cane and Sugar Board projected on October 29 that Thailand’s 2024/25 sugar production will increase by 18% to 10.35 MMT, up from 8.77 MMT in 2023/24. As the world’s third-largest sugar producer and second-largest exporter, Thailand’s increased output could ease some of the supply constraints seen in other regions.
Severe drought and excessive heat in 2023 caused widespread fires in Sao Paulo, Brazil’s top sugar-producing state, leading to significant crop damage. Green Pool Commodity Specialists estimated that as much as 5 MMT of sugarcane was lost due to these fires. In response, Conab, Brazil’s government crop forecasting agency, cut its 2024/25 sugar production estimate to 44 MMT, down from 46 MMT in its previous forecast.
Despite these production challenges, the U.S. Department of Agriculture (USDA) projected in its November 21 bi-annual report that global sugar production for 2024/25 will increase by 1.5% year-on-year to a record 186.619 MMT. The agency also expects global sugar consumption to rise by 1.2% to a record 179.63 MMT, with global sugar ending stocks declining by 6.1% to 45.427 MMT.
As supply concerns in Brazil and India clash with rising production in Thailand and Brazil’s 2025/26 outlook, sugar prices remain volatile, with market direction likely to be influenced by weather patterns, government policies, and global demand trends.
Important News: Sugar prices surge amid lower production in India, Brazil
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