Sugar prices have fallen for three consecutive days, driven by a declining Brazilian real, with the ISO predicting a global sugar deficit for 2024/25 and reduced production estimates. In contrast, projections from Green Pool indicate a potential surplus for 2025/26. India’s production is down significantly, while Thailand anticipates a rise, influencing market dynamics.
Sugar prices have experienced a retreat, marking three consecutive days of decline, reaching two-week lows. This decrease is attributed to the weakening of the Brazilian real, which has influenced export activities. The International Sugar Organization (ISO) has revised its global sugar deficit forecast for the 2024/25 season to -4.88 million metric tons (MMT), while also reducing the production estimate to 175.5 MMT from 179.1 MMT. Conversely, Green Pool Commodity Specialists predict a shift to a surplus of +2.7 MMT for the 2025/26 crop year.
Earlier this week, sugar prices hit a two-and-a-half-month high, extending the upward trend that began in mid-January. The rally in the Brazilian real, which reached a three-and-a-half-month high against the USD, had previously discouraged sugar producers from selling exports, contributing to the steep rise in sugar futures. Today’s reports indicate a significant decline in India’s sugar production, falling 14% year-on-year to 21.98 MMT from October 1 through February 28, further supporting sugar prices.
Alvean, the largest sugar trader globally, noted that insufficient rainfall in Brazil has hindered the growth of sugarcane in certain regions. Prolonged dry conditions could potentially delay the upcoming sugar harvest set to begin in April, adversely affecting production levels. In contrast, the Indian government announced plans on January 20 to permit the export of 1 MMT of sugar this season, easing prior export limitations.
The Indian Sugar Mills Association (ISMA) anticipates a 15% decrease in India’s 2024/25 sugar production, with projections falling to a five-year low of 27.27 MMT. Additionally, Thailand’s sugar production outlook remains bearish, as the Office of the Cane and Sugar Board forecasted an 18% increase to 10.35 MMT for 2024/25, which could further pressure global sugar prices.
Brazil’s sugar crops faced damage due to drought and excessive heat last year, with reports indicating substantial losses in sugarcane. The Brazil government’s Conab agency has revised its sugar production estimate downward to 44 MMT, citing lower yields caused by these unfavorable weather conditions. Concurrently, the USDA projected a 1.5% increase in global sugar production for the 2024/25 season, alongside a forecasted decline in global sugar stocks by 6.1%.
In summary, sugar prices have declined due to the depreciation of the Brazilian real, resulting in revised forecasts of sugar production and global deficits. Factors such as reduced production in India and Brazil, alongside increased expectations from Thailand, play a pivotal role in shaping the market. Overall, the ongoing market conditions suggest lingering volatility in sugar prices as weather patterns and global demand continue to evolve.
Original Source: www.tradingview.com
