Sugar Prices Post Moderate Losses on Demand Woes
Sugar prices have declined due to demand concerns, large deliveries, and expectations of record Brazilian production in 2025/26. The International Sugar Organization (ISO) revised its 2024/25 global sugar deficit forecast to -4.88 MMT, while India’s sugar output dropped 14% year-on-year. However, bearish factors include India allowing 1 MMT of sugar exports and Thailand’s projected production increase. Weather issues in Brazil have affected yields, but global production is still expected to rise.
May NY world sugar #11 (SBK25) Monday closed down -0.30 (-1.62%), and May London ICE white sugar #5 (SWK25) closed down -7.80 (-1.46%).
Sugar prices Monday extended their week-long slide to 2-1/2 week lows. Demand concerns are weighing on 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.
Last Tuesday, sugar prices climbed to a 2-3/4 month high, extending the sharp rally seen since mid-January. The rally in the Brazilian real (^USDBRL) seen from mid-December through mid-February to a 3-3/4 month high against the dollar had discouraged export selling from Brazil’s sugar producers and fueled massive fund short-covering in sugar futures.
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.
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 : Nasdaq.com
