Sugar prices fell to two-week lows as the Brazilian real weakened. Global production forecasts for 2024/25 were adjusted, leading to anticipated deficits. India’s production decreased significantly, while Thailand expects increased output. Environmental challenges in Brazil continue to impact the sugar harvest, with forecasts indicating both surpluses and deficits ahead.
Sugar prices exhibited a downward trend, closing at two-week lows on Friday, with May NY world sugar 11 (SBK25) down by 1.96% and May London ICE white sugar 5 (SWK25) down by 1.32%. The decline was driven by the weakness of the Brazilian real, compounded by forecasts indicating a significant global sugar deficit for 2024/25, projected at -4.88 MMT, compared to a surplus of 1.31 MMT for 2023/24 according to C.
The International Sugar Organization (ISO) also revised its 2024/25 global sugar production forecast downward to 175.5 MMT from an earlier estimate of 179.1 MMT. Conversely, Green Pool Commodity Specialists forecast a return to surplus for the global sugar market in the 2025/26 crop year, predicting an increase to +2.7 MMT from a deficit of -3.7 MMT for the 2024/25 year.
Earlier in the week, prices peaked at a two-and-a-half-month high, driven by a rally in the Brazilian real, which discouraged exports from Brazil and led to significant fund short-covering in futures. Additionally, news of a 14% reduction in India’s sugar production year-on-year to 21.98 MMT has provided some support for prices as reported by the India Sugar and Bio-Energy Manufacturers Association.
Concerns surrounding Brazil’s sugarcane crops have emerged, with Alvean reporting that lack of precipitation could hamper development, potentially postponing the sugar harvest that begins in April. Meanwhile, India’s government announced the export of 1 MMT of sugar, easing restrictions imposed since October 2023, though projections indicate a 15% drop in India’s sugar production for 2024/25.
Adding to the bearish sentiment, Thailand is expected to increase its sugar production by 18% for 2024/25, reaching 10.35 MMT. This increase positions Thailand as the world’s third-largest sugar producer. Conversely, Brazil has faced environmental challenges, with drought and heat adversely affecting sugar crops and reducing production estimates from 46 MMT to 44 MMT due to lower yields.
The USDA has projected a 1.5% rise in global sugar production for 2024/25 to a record 186.619 MMT, coupled with a 1.2% increase in consumption. Ending stocks are forecasted to decline by 6.1% to 45.427 MMT, indicating tightening market conditions. Rich Asplund concludes that the current market shows a complex interplay of factors affecting sugar pricing in the near future.
In summary, sugar prices are influenced by multiple factors, including the Brazilian real’s weakness, global production forecasts, and weather-related impacts on crops. With India’s production expected to decline and Thailand’s output set to rise, the market appears to be balancing between surplus and deficit scenarios. The USDA’s projections further emphasize the ongoing fluctuations in sugar supply and demand dynamics.
Original Source: www.tradingview.com
