Sugar Posts Moderate Gains on the Outlook for a Smaller Global Surplus
Global sugar prices rose as Covrig Analytics cut its 2025/26 surplus forecast to 4.1 MMT. Brazil’s sugarcane crush is projected to fall 1.6%. India’s production declined 12.2% year-over-year, while Thailand’s output is expected to rise 18%. Drought in Brazil and India’s lower production provide support, but an improving global supply outlook continues to pressure prices.
March NY world sugar #11 (SBH25) Tuesday closed up +0.37 (+1.90%), and March London ICE white sugar #5 (SWH25) closed up +13.40 (+2.58%).
Sugar prices rallied Tuesday after Covrig Analytics cut its 2025/26 global sugar surplus estimate to 4.1 MMT from a previous estimate of 5.2 MMT. Sugar added to its gains Tuesday when top sugar trader Alvean projected Brazil would crush 604 MMT of sugarcane in the 2025/26 season, -1.6% lower than last year.
Over the past three weeks, strength in the Brazilian real (^USDBRL) has spurred fund short-covering in sugar, with sugar prices climbing to a 7-week high last Thursday. The real rallied to a 2-3/4 month high last Friday, which discourages export selling from Brazil’s sugar producers.
Sugar also has some carryover support from last Tuesday when Centrum reported that India’s 2024/25 sugar production from October 1 to January 31 was down -12.2% y/y to 16.5 MMT.
On the negative side for sugar, Green Pool Commodity Specialists projected last Wednesday the global sugar market will shift to a surplus of +2.7 MMT in the 2025/26 crop year, compared to a deficit of -3.7 MMT in 2024/25.
Sugar prices have been in a 4-month-long downtrend. On January 21, NY sugar posted a 5-3/4 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, the Indian government 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 after Czarnikow cut its Thailand 2024/25 sugar production estimate on January 29 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 India Sugar Mills Association (ISMA) 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
