Lower Sugar Output in India Lifts Prices
Sugar prices rose as NY sugar hit a 4-week high and London sugar a 7-week high. India’s 2024/25 sugar output fell 12.2% y/y, and a stronger Brazilian real limited exports. However, improved global supply, higher Thai production, and USDA projections of record 2024/25 output and consumption may cap gains. Ending stocks are expected to decline.
March NY world sugar #11 (SBH25) Tuesday closed up +0.40 (+2.08%), and March London ICE white sugar #5 (SWH25) closed up +12.70 (+2.47%).
Sugar prices Tuesday posted moderate gains, with NY sugar climbing to a 4-week high and London sugar climbing to a 7-week high. Reduced sugar output in India boosted prices after Centrum reported Tuesday that India’s 2024/25 sugar production from October 1 to January 31 was down -12.2% y/y to 16.5 MMT.
Strength in the Brazilian real (^USDBRL) is also lifting sugar prices as the real climbed to a 2-1/2 month high against the dollar on Tuesday. The stronger real discourages export selling from Brazil’s sugar producers.
Sugar prices have been in a 4-month-long downtrend. On January 21, NY sugar posted a 5-1/2 month nearest-futures low, and London sugar posted a 3-1/2 year low. An improving global sugar supply outlook is weighing on sugar prices. On January 20, India said it would allow its sugar mills to export 1 MMT of sugar this season, easing its 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.
On November 21, the International Sugar Organization (ISO) reduced its 2024/25 global sugar deficit forecast to -2.51 MMT, compared to an August forecast of -3.58 MMT. ISO also raised its 2023/24 global sugar surplus estimate to 1.31 MMT from an August projection of 200,000 MT.
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.
Sugar found support last Wednesday after Czarnikow cut its Thailand 2024/25 sugar production estimate to 10.8 MMT from a previous forecast of 11.6 MMT.
Drought and excessive heat last year caused fires in Brazil that damaged sugar crops in Brazil’s top sugar-producing state of Sao Paulo. Sugar cane industry group Orplana said that as many as 2,000 fire outbreaks affected up to 80,000 hectares of planted sugarcane in 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 today that cumulative 2024/25 Center-South sugar output through mid-January is down -5.5% y/y to 39.794 MMT.
Sugar has support from signs of smaller sugar production in India, the world’s second-largest producer. The ISM projects India’s 2024/25 sugar production to fall -15% y/y to a 5-year low of 27.27 MMT.
As a supportive factor for sugar prices, the ISO on August 30 forecasted 2024/25 global sugar production of 179.3 MMT, down -1.1% y/y from 181.3 MMT in 2023/24.
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.
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Source : BarChart
