Sugar prices have declined to two-week lows due to rain forecasts in Brazil, a weakening Brazilian real, and updated production estimates from India and Brazil. While the International Sugar Organization revised its deficit forecast upward, projections indicate a tightening global market amidst potential increases in production from Thailand and easing export restrictions in India.
Sugar prices have seen a substantial decline, reaching two-week lows. The downturn is primarily influenced by forecasts of rain in Brazil’s sugar-growing regions, which are expected to ease dryness concerns. Notably, meteorologist Climatempo predicts widespread showers that could positively impact sugar production in the upcoming week.
Additionally, the Brazilian real has depreciated to a two-week low, further pressuring sugar prices. A weaker currency incentivizes Brazil’s sugar producers to increase export sales, impacting the global market. Last week, sugar prices had briefly rallied due to indications of reduced sugar production worldwide.
Recent reports signaled lowered sugar production in India and Brazil, with projections from the Indian Sugar and Bio-energy Manufacturers Association reducing its forecast to 26.4 million metric tons (MMT). Furthermore, Unica has confirmed a 5.3% year-on-year decrease in Brazil’s sugar output through mid-March, now totaling 39.983 MMT.
Conversely, the International Sugar Organization (ISO) has revised its forecast for the global sugar deficit and reduced the expected global sugar production for the year 2024/25 to 175.5 MMT. This signifies a tightening market as previous forecasts suggested a surplus.
On a more bearish note, projections from Datagro indicate an increase in Brazil’s sugar production to 42.4 MMT for the 2025/26 crop year. Additionally, if India eases its export restrictions for sugar, which currently allow for 1 MMT, this may adversely affect global sugar prices.
Thai sugar production is also projected to climb significantly, with estimates suggesting an 18% increase to 10.35 MMT for the 2024/25 period. This reinforces the bearish sentiment due to Thailand’s position as a major sugar producer and exporter.
In Brazil, previous droughts and heat waves have damaged crops, with estimates suggesting a loss of up to 5 MMT of sugar cane due to fires last year. Consequently, the government’s crop forecasts have been downgraded as well.
The USDA’s bi-annual report predicts a modest rise in global sugar production and consumption for the 2024/25 period, showing an anticipated increase of 1.5% for production, reaching 186.619 MMT. This may provide a slight balance to the market conditions going forward.
All data presented is intended solely for informational purposes and should be reviewed within the appropriate disclosures and policies.
In conclusion, sugar prices are currently influenced by multiple factors, including Brazilian rainfall forecasts and the depreciation of the Brazilian real. Recent reductions in production forecasts from key sugar-producing countries have heightened market tension. However, projections of increased production elsewhere, especially in Thailand, alongside potential changes in India’s export policies, introduce a bearish outlook for sugar prices in the near future. Monitoring these developments will be crucial for industry stakeholders.
Original Source: www.tradingview.com
