Sugar prices have declined for the third day, reaching two-week lows, driven by a weakening Brazilian real. The ISO revised its global sugar deficit forecast and production estimates, while reports of lower sugar output from India and increased production projections from Thailand influence market sentiments. Environmental factors affecting Brazilian crops further complicate the supply outlook.
Sugar prices have trended lower for three consecutive days, reaching two-week lows, primarily impacted by a weakening Brazilian real. The May NY world sugar 11 (SBK25) fell by 0.45 (-2.38%), while May London ICE white sugar 5 (SWK25) decreased by 9.20 (-1.70%). The International Sugar Organization (ISO) revised its 2024/25 global sugar deficit forecast downward, predicting a deficit of 4.88 million metric tons (MMT) compared to November’s estimate of 2.51 MMT. Additionally, the ISO reduced its global sugar production forecast to 175.5 MMT, which is a decrease from the November forecast of 179.1 MMT.
Conversely, Green Pool Commodity Specialists have projected a shift to a global sugar surplus of 2.7 MMT in the 2025/26 crop year, contrasting the anticipated deficit of 3.7 MMT in 2024/25. This follows a period where sugar prices reached a 2.5-month high due to favorable currency fluctuations that hampered Brazilian export sales from mid-December through mid-February.
However, recent reports indicate a 14% year-over-year decline in India’s sugar production to 21.98 MMT for the marketing year from October 1 through February 28, which could support sugar prices. Alvean, a leading global sugar trader, warned that below-average rain could jeopardize Brazil’s upcoming sugar harvest, potentially delaying production.
In a bearish turn, the Indian government announced on January 20 a temporary allowance for sugar mills to export 1 MMT, easing previous restrictions. The India Sugar Mills Association (ISMA) projects a further decline in India’s 2024/25 sugar production, estimating a 15% drop to a five-year low of 27.27 MMT.
Projected increases in Thailand’s sugar production, forecasted to rise 18% to 10.35 MMT for 2024/25, add a bearish outlook for sugar prices in the market. Brazil’s sugar output has also been affected by environmental factors, with drought and fires damaging crops. The Brazilian government has consequently reduced its 2024/25 production estimate from 46 MMT to 44 MMT.
Finally, the USDA projects global sugar production for 2024/25 to increase by 1.5% year over year to a record 186.619 MMT, alongside an anticipated rise in sugar consumption to a record 179.63 MMT. Global ending stocks are also expected to decline by 6.1% year over year to 45.427 MMT.
On the date of publication, Rich Asplund had no positions in any mentioned securities. All data is for informational purposes only.
In summary, sugar prices are facing downward pressure due to a weaker Brazilian real and anticipated production changes in key regions. The USDA’s forecasts indicate rising global sugar production and consumption, which alongside weather concerns in Brazil and Indian export allowances, creates a complex market landscape. Stakeholders are advised to monitor these dynamics closely as they may influence future price trends.
Original Source: www.tradingview.com
