NY sugar prices fell on rain forecasts for Brazil, alleviating dryness concerns. Recent data showed a decline in global sugar production, while projections indicated shifting market dynamics, including increased output in Thailand. Various reports suggest declining sugar production, especially in Brazil and India, yet the overall market remains influenced by emerging global trends.
On Friday, May NY world sugar 11 (SBK25) closed at -0.06 (-0.31%), while May London ICE white sugar 5 (SWK25) rose by +2.80 (+0.52%). The decline in NY sugar prices, which reached a two-week high earlier, is attributed to anticipated rainfall in Brazil for the coming week, easing concerns regarding dryness and potentially benefiting sugarcane yields. Weather forecasts from Somar Meteorologia indicate widespread showers may improve conditions for sugarcane production.
Sugar prices initially surged this week owing to signs of reduced global sugar production. A report from Unica highlighted a cumulative drop of 5.6% year-on-year in 2024/25 Center-South sugar output through February, totaling 39.822 million metric tons (MMT). Additionally, the Indian Sugar and Bio-energy Manufacturers Association downgraded its 2024/25 sugar production estimate for India to 26.4 MMT, down from 27.27 MMT, citing lower yields.
The International Sugar Organization (ISO) noted a revised forecast for a global sugar deficit of -4.88 MMT for 2024/25, up from a November prediction of -2.51 MMT. Furthermore, the ISO adjusted its global sugar production estimate down to 175.5 MMT from 179.1 MMT due to tightening market conditions. In contrast, Green Pool Commodity Specialists predicted a shift to a surplus of +2.7 MMT in the 2025/26 crop year.
Last week, sugar prices reached a seven-week low, influenced by weak demand signals as Wilmar International Ltd and Sucres et Denrees SA took significant delivery of 1.7 MMT of raw sugar. This substantial delivery is regarded as bearish for prices, suggesting limited alternative markets for sellers. Additionally, Datagro projected that Brazil’s Center-South sugar production for 2025/26 would rise 6% to 42.4 MMT.
Further bearish sentiments arose with the Indian government permitting sugar mills to export 1 MMT, alleviating previous restrictions. India significantly limited sugar exports since October 2023 to ensure domestic supply health. However, the India Sugar Mills Association projects a 17.5% drop in 2024/25 sugar production, marking a five-year low at 26.4 MMT.
The outlook for Thai sugar production is also a bearish element; the Office of the Cane and Sugar Board forecasts an 18% increase to 10.35 MMT for 2024/25. Thailand, as the world’s third-largest sugar producer, had previously produced 8.77 MMT during the previous season. It holds substantial implications for global sugar pricing.
Brazil’s sugar production has faced challenges due to drought and extreme heat, which resulted in crop-damaging fires in the primary producing state of Sao Paulo. Green Pool Commodity Specialists estimated a loss of 5 MMT of sugar cane, leading Conab to adjust its Brazil sugar production forecast downward from 46 MMT to 44 MMT.
The USDA’s November bi-annual report anticipates a 1.5% increase in global sugar production for 2024/25, reaching a record 186.619 MMT alongside a 1.2% rise in human sugar consumption to a record 179.63 MMT. The USDA also projected a decline in global ending stocks by 6.1% to 45.427 MMT.
The analysis of current sugar market conditions reveals a decline in NY sugar prices, attributed primarily to rainfall forecasts in Brazil that may alleviate drought concerns. Although several reports indicate declining production estimates in Brazil and India, increases in Thai sugar production add a bearish outlook. The overall dynamics of supply, weather patterns, and market demands will continue to shape the sugar prices into the foreseeable future.
Original Source: www.tradingview.com
