Sugar prices have declined due to projected record sugar production in Brazil for 2025/26, alongside falling crude oil prices. India has reduced production forecasts while allowing some exports, contrasting with Thailand’s expected increase in production. Market analysts warn of tightening global supplies despite rising production estimates, indicating shifts in the sugar market dynamics.
As of today, May NY world sugar 11 (SBK25) has decreased by 0.37 (-1.85%), while May London ICE white sugar 5 (SWK25) saw a decline of 8.00 (-1.42%). This drop in sugar prices is influenced by Czarnikow’s projection of Brazil’s sugar production reaching a record 43.6 million metric tons (MMT) for the 2025/26 season, making sugar production more lucrative than ethanol. Additionally, a recent decrease in crude oil prices has contributed further pressure on sugar prices.
Previously, sugar prices had surged to a 2-1/2 month high, continuing a strong rally that began mid-January. The value of the Brazilian real, which saw significant gains from December to February, also supported sugar prices by reducing Brazil’s export sales. Recently, the real has stabilized below a three-month peak against the US dollar.
Support for sugar prices emerged from a report detailing a -12% year-over-year decline in India’s sugar production, totaling 19.7 MMT during the marketing year up to mid-February. Alvean, the largest sugar trader globally, noted that insufficient rainfall in Brazil has hindered sugarcane growth, potentially delaying the April harvest and impacting future production.
On the bearish side, India is allowing its mills to export 1 MMT of sugar this season, following previous restrictions aimed at ensuring domestic supply. The Indian Sugar Mills Association estimates a -15% drop in India’s sugar output for 2024/25, a five-year low at 27.27 MMT. Meanwhile, Thailand’s sugar production outlook is also bearish, expected to increase by +18% year-on-year to 10.35 MMT.
Drought and heat last year damaged sugar crops in Brazil’s leading producing areas, particularly in Sao Paulo. Green Pool Commodity Specialists reported disastrous fires which resulted in a loss of approximately 5 MMT of sugarcane. Brazil’s government agency Conab revised its sugar production estimate down to 44 MMT due to reduced yields caused by adverse weather.
According to the USDA’s November report, global sugar production for the 2024/25 season is expected to rise by +1.5% to 186.619 MMT, with consumption also climbing to a record 179.63 MMT. However, global sugar ending stocks are projected to fall -6.1% to 45.427 MMT, indicating a tightening market.
The International Sugar Organization forecasts a global sugar deficit of -2.51 MMT for 2024/25, contrasting with a 2023/24 surplus. Green Pool Commodity Specialists reported expectations of a shift back to a surplus of +2.7 MMT in the 2025/26 crop year, reversing the earlier deficit projections.
On the publication date, Rich Asplund disclosed no relevant positions in the securities mentioned. For more information, refer to the Barchart Disclosure Policy.
In summary, sugar prices are currently under pressure due to anticipated record production in Brazil, alongside fluctuating crude oil prices. The global sugar market remains dynamic, with expectations of shifts in both supply and demand, influenced by events in major producing countries like Brazil and India. As production forecasts evolve, market participants must closely monitor these developments.
Original Source: www.tradingview.com
