March NY world sugar #11 (SBH25) on Monday closed down -0.22 (-1.03%), and May London ICE white sugar #5 (SWK25) closed down -5.50 (-0.98%).
NY sugar prices on Monday edged to a new 2-1/4 month high but then fell back on some long liquidation pressure after the sharp rally seen over the past month.
The rally in the Brazilian real (^USDBRL) seen from mid-December through mid-February has discouraged export selling from Brazil’s sugar producers and is bullish for sugar prices. In the past several sessions, the Brazilian real has consolidated mildly below last Tuesday’s 3-month high against the US dollar.
Sugar prices saw support from last Monday’s news that India’s sugar production fell -12% yr/yr to 19.7 MMT in the marketing year-to-date from October 1 through February 15, according to the India Sugar and Bio-Energy Manufacturers Association.
Alvean, the world’s largest sugar trader, said on February 13 that below-average precipitation in Brazil means sugarcane is underdeveloped in some areas, and if showers remain weak, the sugar harvest that begins in April could be delayed, and sugar production would suffer.
In a bearish factor, the Indian government said on January 20 that it would allow its sugar mills to export 1 MMT of sugar this season, easing the restrictions placed on sugar exports in 2023. India has restricted sugar exports since October 2023 to maintain adequate domestic supplies. India allowed mills to export only 6.1 MMT of sugar during the 2022/23 season to September 30 after allowing exports of a record 11.1 MMT in the previous season. However, the India Sugar Mills Association (ISMA) projects that India’s 2024/25 sugar production will fall -15% y/y to a 5-year low of 27.27 MMT.
The outlook for higher sugar production in Thailand is bearish for sugar prices. On October 29, Thailand’s Office of the Cane and Sugar Board projected that Thailand’s 2024/25 sugar production would jump by +18% y/y to 10.35 MMT. Thailand produced 8.77 MMT of sugar in the 2023/24 season that ended in April. Thailand is the world’s third-largest sugar producer and the second-largest sugar exporter.
Drought and excessive heat last year caused fires in Brazil that damaged sugar crops in Brazil’s top sugar-producing state of Sao Paulo. Green Pool Commodity Specialists noted that as much as 5 MMT of sugar cane may have been lost due to the fires. Conab, Brazil’s government crop forecasting agency, cut its 2024/25 Brazil sugar production estimate from November 21 to 44 MMT from a previous forecast of 46 MMT, citing lower sugarcane yields due to drought and excessive heat. Unica reported last Thursday that cumulative 2024/25 Center-South sugar output through January fell -5.5% y/y to 39.805 MMT.
The USDA, in its bi-annual report released November 21, projected that global 2024/25 sugar production would climb +1.5% y/y to a record 186.619 MMT and that global 2024/25 human sugar consumption would increase +1.2% y/y to a record 179.63 MMT. The USDA also forecasted that 2024/25 global sugar ending stocks would decline -6.1% y/y to 45.427 MMT.
Meanwhile, the International Sugar Organization (ISO) on November 21 forecasted a 2024/25 global sugar deficit of -2.51 MMT, showing a tightening market from the 2023/24 global sugar surplus of 1.31 MMT. For its part, Green Pool Commodity Specialists on February 5 projected that the global sugar market will shift to a surplus of +2.7 MMT in the 2025/26 crop year from its estimate of a deficit of -3.7 MMT in 2024/25.
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Source : BarChart
