Sugar prices saw a decline for the third straight day, primarily influenced by the weakening Brazilian real. The International Sugar Organization has revised global sugar deficit and production forecasts, while Indian sugar production also faces projected declines. Conversely, Thailand anticipates an increase in sugar output, complicating market dynamics.
On Thursday, sugar prices declined for the third consecutive day, reaching two-week lows, primarily due to the depreciation of the Brazilian real. May NY world sugar 11 fell by 2.38%, while May London ICE white sugar 5 dropped by 1.70%. The International Sugar Organization (ISO) revised its 2024/25 global sugar deficit forecast to 4.88 million metric tons, a significant adjustment from the previous forecast of 2.51 million metric tons, indicating a tightening market following the surplus of 1.31 million metric tons in 2023/24.
In the previous week, sugar prices had surged to a two-and-a-half-month high, continuing the upward trend observed since mid-January. This rise was largely attributed to the strengthening of the Brazilian real against the dollar, which deterred export sales and prompted significant short-covering in sugar futures. Additionally, news from India indicated a 14% year-on-year decline in sugar production, further supporting sugar prices.
Concerns about Brazil’s weather conditions are also influencing the market, as anticipated below-average rainfall could hinder sugarcane growth in certain regions. Alvean, the leading sugar trader, noted that if rainfall remains insufficient, the sugar harvest, beginning in April, might be delayed and overall sugar production could decline.
Market dynamics are further complicated by India’s planned sugar exports, allowing 1 million metric tons in this season, easing previous restrictions. However, forecasts indicate a potential 15% drop in India’s sugar production in 2024/25, compounding existing challenges.
Conversely, Thailand is expected to see an 18% increase in sugar production in 2024/25, which could exert downward pressure on global sugar prices. Moreover, Brazil’s sugar industry faces ongoing challenges from recent droughts and excess heat that have harmed crops, with significant losses anticipated. Government estimates have also reduced sugar production forecasts for Brazil due to these adverse conditions.
According to the USDA’s recent report, global sugar production is projected to rise by 1.5% year-on-year, reaching a record high, while human sugar consumption is set to grow moderately. Despite the anticipated increase, ending stocks are expected to decline, indicating potential market tightness.
In summary, sugar prices have retreated due to the weakening Brazilian real, revised global production forecasts, and challenging weather conditions. While there are concerns about production decreases in India, Thailand’s expected output increase may counterbalance this. The overall market sentiment remains cautious as stakeholders monitor weather conditions and international trade dynamics.
Original Source: www.tradingview.com
