Sugar prices have declined due to rain forecasts in Brazil, with May NY sugar down 0.94% and London ICE white sugar down 0.26%. Despite earlier gains on lower global sugar production forecasts, expectations of increased yields and revised production estimates from key producers like Brazil and India have influenced market dynamics.
Recent forecasts for rain in Brazil have led to a decline in sugar prices. As of today, May NY world sugar 11 (SBK25) fell by 0.18 to settle at a decrease of 0.94%, while May London ICE white sugar 5 (SWK25) decreased by 1.40, equivalent to a 0.26% drop. The anticipated rain is expected to alleviate dryness concerns and potentially enhance sugarcane yields.
Despite the price decline, sugar prices had rallied earlier in the week due to indications of lower global sugar production. Reports from Unica indicated a 5.6% year-on-year drop in cumulative Center-South sugar output for the 2024/25 season. Additionally, the Indian Sugar and Bio-energy Manufacturers Association reduced its production forecast for India, citing lower cane yields.
The International Sugar Organization (ISO) last week revised its global sugar deficit forecast for 2024/25 to 4.88 million metric tons, an increase from its previous estimate. The ISO also updated its global production forecast, projecting a decrease to 175.5 million metric tons from 179.1 million metric tons. Green Pool Commodity Specialists noted a forecasted surplus in global sugar of 2.7 million metric tons for the 2025/26 crop year.
Another influence on the market was a significant delivery of 1.7 million metric tons of raw sugar by traders Wilmar International Ltd and Sucres et Denrees SA, which correlated with a dip in sugar prices to seven-week lows. This large delivery suggested limited market demand, often perceived as a bearish signal for prices.
A forecast by consultant Datagro anticipates Brazil’s Center-South sugar production for 2025/26 to increase by 6%, reaching 42.4 million metric tons. Furthermore, projections from Czarnikow indicated that production might hit a record 43.6 million metric tons as producing sugar becomes more favorable than ethanol.
On the policy front, the Indian government recently announced a lift on sugar export restrictions, allowing sugar mills to export 1 million metric tons during the current season, contrasting the more restrictive measures implemented in 2023. However, projections still show India’s sugar production decreasing by 17.5%, reaching a five-year low.
In Thailand, forecasts suggest an 18% increase in sugar production for the 2024/25 season, further contributing to bearish sentiments regarding sugar prices. The increase is noteworthy as Thailand stands as the world’s third-largest sugar producer.
Brazil’s sugar industry has faced significant setbacks owing to drought and heat, which led to severe fires damaging crops in the São Paulo region. As consequence, Brazil’s official crop forecasting agency revised its sugar production estimates downwards.
The USDA’s bi-annual report indicated a predicted global sugar production increase of 1.5% for the 2024/25 season, alongside a 1.2% increase in human sugar consumption, potentially indicating an evolving market landscape in global sugar supply and demand dynamics.
Sugar prices have recently experienced fluctuations primarily due to weather forecasts in Brazil, which suggest potential improvements in sugarcane yields. While forecasts hint at lower global production figures, recent trends indicate a tight market characterized by significant adjustments in both supply and demand. The overall outlook remains complex, depending on various regional production forecasts and economic policies implemented by major sugar-producing countries.
Original Source: www.tradingview.com
