Sugar prices have surged due to lowered production forecasts from Brazil and India. Brazil’s output fell by 5.6% to 39.822 MMT, while India’s estimates declined to 26.4 MMT. A stronger Brazilian real impacted export activities, and the ISO raised its global sugar deficit forecast to 4.88 MMT, indicating tightening market conditions. Future projections suggest increased production in Brazil and Thailand, though weather-related challenges persist.
Recent fluctuations in global sugar prices have been attributed to reduced production forecasts from major producers Brazil and India. On May 1, 2024, sugar prices on the New York world market rose by 4.06%, reaching a three-week high. This surge was influenced by a report from Unica indicating a 5.6% year-on-year decrease in Brazil’s sugar output for the 2024/25 season, totaling 39.822 million metric tons (MMT). Meanwhile, India’s production estimate was also reduced to 26.4 MMT, citing declining cane yields.
The Brazilian real’s appreciation against the dollar further drove sugar prices up, as a stronger currency deters exports from Brazil. Concurrently, the International Sugar Organization (ISO) revised its global sugar deficit forecast for 2024/25 to 4.88 MMT, highlighting tightness in the market, compared to a surplus of 1.31 MMT for the previous year. Additionally, the ISO lowered its production estimate to 175.5 MMT from a previous forecast of 179.1 MMT.
On a positive note for the sugar market, projections from consultancy Datagro indicated an increase in Brazil’s sugar production for the 2025/26 crop year, while sugar trader Czarnikow anticipates record production of 43.6 MMT due to greater profitability compared to ethanol production. Conversely, governmental decisions in India have allowed for the export of 1 MMT of sugar this season, having previously restricted exports to ensure domestic supply.
Furthermore, Thailand is expected to contribute to global sugar supply with a projected production increase of 18% to 10.35 MMT for 2024/25, thus impacting prices negatively as it is a significant exporter. Drought and heat have severely impacted Brazilian sugar production, with losses estimated at 5 MMT due to crop damage from fires.
The USDA has projected global sugar production for 2024/25 to rise by 1.5% to reach a record 186.619 MMT, with consumption expected to follow suit at 179.63 MMT. Ending stocks of sugar are anticipated to decrease by 6.1% year-on-year, with the global sugar market in a state of flux due to varying factors influencing supply and demand.
In conclusion, the surge in sugar prices can be attributed to reduced production estimates from Brazil and India, compounded by a stronger Brazilian real that deters exports. Despite some positive projections for future production, the market may remain tight due to environmental challenges and governmental export restrictions in India. The evolving landscape indicates a complex interplay of factors affecting the global sugar economy.
Original Source: www.tradingview.com
