New York sugar prices fell on Friday due to rain forecasts in Brazil that may improve sugarcane yields. While there were initial gains related to reduced global production forecasts, significant deliveries indicated lower demand. Adjustments from the ISO and projections from India and Thailand add complexities to the market outlook. Overall, the sugar market is poised for shifts based on weather and production forecasts.
New York sugar prices declined on Friday, with May NY world sugar 11 closing at a decrease of 0.06 cents (-0.31%). Conversely, May London ICE white sugar 5 experienced a rise of 2.80 cents (+0.52%). This dip in NY sugar prices from two-week highs coincided with forecasts of rain in Brazil, which should alleviate drought conditions and potentially enhance sugarcane yields as reported by Somar Meteorologia.
The prices had surged earlier in the week, driven by indications of reduced global sugar production. The União da Indústria da Cana-de-Açúcar (Unica) revealed that cumulative sugar output in Brazil’s Center-South region decreased by 5.6% year-on-year through February to 39.822 million metric tons (MMT). Moreover, the Indian Sugar and Bio-energy Manufacturers Association revised its production forecast for 2024/25 from 27.27 MMT to 26.4 MMT due to lower cane yields.
Additionally, the International Sugar Organization (ISO) adjusted its global sugar deficit forecast for 2024/25 to -4.88 MMT from a prior estimate of -2.51 MMT, signaling a tightening market. The ISO also revised its global sugar production forecast downward to 175.5 MMT from 179.1 MMT. Green Pool Commodity Specialists aligned their predictions with expectations of a surplus of 2.7 MMT in the 2025/26 crop year, contrasting with a current deficit.
Nonetheless, sugar prices suffered a setback, reaching seven-week lows due to indications of weakened demand, marked by record deliveries of 1.7 MMT of raw sugar by traders Wilmar International Ltd and Sucres et Denrees SA against the March NY futures contract. Such significant deliveries typically indicate bearish sentiment among sellers.
Furthermore, projections from Datagro suggested that Brazil’s sugar production for 2025/26 may rise to 42.4 MMT, reflecting a 6% increase year-on-year. Similarly, Czarnikow forecasted record sugar production of 43.6 MMT in Brazil for the same year, attributing this rise to the profitability of sugar over ethanol.
From the Indian sector, the government’s decision to permit the export of 1 MMT of sugar marks an easing from previously tight restrictions. Despite this, ISMA predicts a 17.5% year-on-year decline in India’s sugar production for 2024/25, estimating a five-year low of 26.4 MMT.
The outlook of increased sugar production in Thailand also contributes to negative price forecasts, with the Thai Office of the Cane and Sugar Board anticipating an 18% rise to 10.35 MMT. As the world’s third-largest sugar producer, Thailand’s substantial production could further impact global sugar prices.
Prior climatic adversities, including droughts and heatwaves, resulted in crop damage in Brazil’s prominent sugar-producing area, São Paulo, leading to an estimated loss of 5 MMT. Brazil’s government agency, Conab, has revised its sugar production estimate down from 46 MMT to 44 MMT due to lower yields stemming from unfavourable weather conditions.
The USDA’s bi-annual report indicated a projected increase in global sugar production to a record 186.619 MMT, alongside a rise in human sugar consumption to 179.63 MMT, which would imply a reduction in global ending stocks by 6.1% to 45.427 MMT.
In conclusion, New York sugar prices have experienced fluctuations due to weather forecasts in Brazil, impacting sugarcane yields and overall production expectations. Additionally, global market dynamics, including Indian production forecasts and Thailand’s expected increases, contribute to a complex outlook for sugar prices moving forward. As the market continues to stabilize following earlier highs, observers will need to consider the ongoing impacts of demand, climatic conditions, and production levels from key regions.
Original Source: www.tradingview.com
