Sugar prices have surged recently due to lowered production estimates from Brazil and India, with May NY sugar prices up 4.06%. Brazil’s sugar output decreased by 5.6% year-on-year, and India’s forecast was reduced to 26.4 MMT. The global sugar deficit is now projected at 4.88 MMT for 2024/25, indicating tighter global supply amidst mixed future production outlooks.
Sugar prices have seen a significant rise due to reduced production estimates from key producers Brazil and India. The May NY sugar 11 closed up 4.06%, reaching a three-week high. The decline in Brazil’s sugar output for 2024/25 by 5.6% year-on-year and India’s reduced forecast of 26.4 MMT for the same period emphasize the tightening sugar supply globally.
The Brazilian real’s appreciation against the dollar has further strengthened sugar prices, as a stronger real limits the export incentives for Brazilian producers. The International Sugar Organization has updated its forecast, predicting a global sugar deficit of 4.88 MMT for 2024/25, compared to an earlier estimate of 2.51 MMT. They also reduced the global sugar production forecast to 175.5 MMT.
Despite this bullish outlook, some bearish factors exist. Projections for Brazil’s future sugar production are optimistic, with consultant Datagro estimating an increase to 42.4 MMT for 2025/26. Accessibility of sugar exports by India may also enhance supply, as restrictions eased, allowing for 1 MMT to be exported this season. Nonetheless, ISMA forecasts a significant drop in India’s sugar production for 2024/25.
Thailand’s anticipated rise in sugar production by 18% for 2024/25 adds a challenging dynamic to the market. This increase may suppress prices as Thailand is a major global producer. Agricultural conditions in Brazil, particularly drought and high temperatures, have led to substantial losses in sugar cane, further complicating production forecasts.
The USDA projects an increase in global sugar production, estimating 186.619 MMT for 2024/25 with a corresponding rise of 1.2% in human consumption. However, anticipated reductions in ending stocks reflect broader market uncertainties. Thus, while current spikes in sugar prices are notable, the overall production landscape exhibits both promising and negative signals for the coming years.
Recent price surges in sugar markets indicate a crucial shift stemming from reduced production estimates in major global producers like Brazil and India. Key projections reveal tightening supplies, with forecasts illustrating enduring uncertainties. While some factors point toward increased future production, the overarching trends support a heightened vigilance in market monitoring in the face of changing conditions.
Original Source: www.tradingview.com
