Sugar prices surged following reduced production estimates from Brazil and India, with May New York world sugar closing up 4.06%. Brazil’s sugar output fell by 5.6%, while India’s forecast dropped to 26.4 MMT. The stronger Brazilian real affected export dynamics, and the International Sugar Organization raised its global sugar deficit forecast, indicating a tightening market. However, future production estimates in Brazil and Thailand could pose risks to price stability.
Sugar prices have recently surged due to decreasing production estimates in key regions, particularly Brazil and India. In the latest trading session, May New York world sugar closed at a three-week high, rising 4.06%, alongside a 4.30% increase in London ICE white sugar. Unica’s report indicated that Brazil’s sugar output dropped by 5.6% year-on-year, amounting to 39.822 million metric tons (MMT) as of February. Concurrently, India’s sugar production forecast was reduced to 26.4 MMT, down from 27.27 MMT, attributed to lower cane yields.
The surge in sugar prices also coincided with a strengthening of the Brazilian real against the U.S. dollar, reaching the highest level in three and a half weeks. This rise in currency value discourages Brazilian producers from exporting their sugar. The International Sugar Organization (ISO) recently adjusted its global sugar deficit forecast for 2024/25 to -4.88 MMT, reflecting tighter market conditions compared to previous estimates. Additionally, the ISO reduced its global sugar production forecast from 179.1 MMT to 175.5 MMT.
Despite the bullish sentiment, there were also bearish forecasts affecting the sugar market. Datagro’s projections indicated an increase in Brazil’s 2025/26 sugar production to 42.4 MMT, while Czarnikow’s forecast suggested a potential record production of 43.6 MMT. Additionally, the Indian government announced that sugar mills would be allowed to export 1 MMT this season, relaxing earlier restrictions aimed at preserving domestic supply. The India Sugar Mills Association predicts a significant drop in India’s sugar production for 2024/25.
Thailand’s expected increase in sugar production poses additional downward pressure on prices, with projections estimating an 18% rise to 10.35 MMT for the 2024/25 season. Thailand, as the world’s third-largest sugar producer, is expected to have a notable impact on global supply. Furthermore, climate challenges, such as last year’s drought and fires resulting in substantial losses of sugar cane in Brazil, have prompted revisions in production forecasts.
On a broader scale, the USDA has projected a 1.5% increase in global sugar production for 2024/25, reaching a record 186.619 MMT, while human consumption is predicted to rise by 1.2% to 179.63 MMT. Additionally, a decline in ending stocks is anticipated. Industry professionals and market analysts are closely monitoring these developments amidst fluctuating production forecasts and overall market conditions.
In conclusion, the recent surge in sugar prices reflects ongoing concerns regarding reduced sugar production estimates in Brazil and India, alongside a tighter global supply forecast. While bullish factors like currency strength and decreased production estimates play a significant role, bearish projections concerning future production in various regions are causing market fluctuations. Moreover, weather-related challenges have further complicated the outlook for sugar producers worldwide.
Original Source: www.tradingview.com
