Sugar Prices Rebound as Dollar Weakness Spurs Short Covering
Sugar prices hit a six-week low due to weak demand and large deliveries. Brazil’s 2025/26 sugar output may reach a record 43.6 MMT, while India’s 2024/25 production is set to drop -15%. Thailand’s output is rising, but Brazil faces weather-related losses. The ISO forecasts a global sugar deficit of -4.88 MMT for 2024/25.
On Thursday, sugar prices fell to 6-week lows due to demand concerns amid abundant supplies. Weak demand is hammering sugar prices after sugar traders Wilmar International Ltd and Sucres et Denrees SA took record delivery of 1.7 MMT of raw sugar against the March NY futures contract that expired last Friday. Large deliveries are typically considered bearish for prices, indicating that sellers have few other markets to sell to.
Sugar prices were already on the defensive from last Wednesday when sugar trader Czarnikow projected Brazil’s 2025/26 sugar production would climb to a record 43.6 MMT, saying producing sugar is more profitable than ethanol production.
Meanwhile, the International Sugar Organization (ISO) last Thursday raised its 2024/25 global sugar deficit forecast to -4.88 MMT from a November forecast of -2.51 MMT, showing a tightening market from the 2023/24 global sugar surplus of 1.31 MMT. Last Thursday, the ISO also cut its 2024/25 global sugar production forecast to 175.5 MMT from a November forecast of 179.1 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.
Sugar prices have support from last Friday’s news that stated India’s sugar production fell -14% yr/yr to 21.98 MMT in the marketing year-to-date from October 1 through February 28, according to the India Sugar and Bio-Energy Manufacturers Association.
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 Wednesday that cumulative 2024/25 Center-South sugar output through mid-February fell -5.6% y/y to 39.812 MMT.
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Source : Nasdaq.com
