Sugar prices have declined amid forecasts of rain in Brazil and a weakening Brazilian real. Recent production estimates from Brazil and India also indicate lower output. The International Sugar Organization and USDA have issued updated forecasts, pointing toward a potential global sugar deficit in the upcoming seasons, amid various predictions for production increases in other regions like Thailand.
Sugar prices have declined to two-week lows, influenced by forecasts of rain in Brazil’s sugar-growing regions, which alleviates previous dryness concerns. As a result, the May NY world sugar contract is down by 0.79%, while May London ICE white sugar has decreased by 0.35%. Meteorologist Climatempo expects widespread rain for the upcoming week, further impacting sugar prices negatively.
Contributing to this downturn is the Brazilian real, which has reached a two-week low against the dollar, encouraging sugar producers in Brazil to increase their export activities. Earlier last week, sugar prices had peaked, with NY sugar at a one-month high and London sugar at a four-month high due to expectations of reduced global sugar production.
The Indian Sugar and Bio-energy Manufacturers Association recently revised its 2024/25 production forecast down to 26.4 million metric tons (MMT) from 27.27 MMT, citing lower cane yields. In Brazil, Unica reported a 5.3% year-on-year decline in sugar output for the 2024/25 season, while Czarnikow lowered its 2025/26 production estimate to 42 MMT, down from 43.6 MMT.
In contrast, the International Sugar Organization (ISO) has raised its outlook for a global sugar deficit to 4.88 MMT and revised down its production forecast to 175.5 MMT. On the other hand, Datagro has predicted that Brazil’s Center-South production will increase by 6% to 42.4 MMT in 2025/26, suggesting a mixed outlook for sugar supply.
The Indian government’s recent decision to permit the export of 1 MMT of sugar has further increased bearish sentiment in the market. India has limited sugar exports since late 2023 to ensure domestic supply adequacy. Moreover, projections indicate that India’s sugar production may drop to a five-year low of 26.4 MMT in 2024/25.
Thailand has also contributed to concerns regarding sugar prices, with a projected 18% increase in its 2024/25 sugar production, forecasted at 10.35 MMT. Drought and excessive heat last year have severely impacted Brazil’s sugar cane crop, with an estimated loss of 5 MMT due to fires in Sao Paulo. Consequently, Brazil’s Conab has reduced its production estimate to 44 MMT.
The USDA has projected a rise in global sugar production by 1.5% year-on-year to 186.619 MMT for 2024/25, alongside a forecasted 1.2% increase in global sugar consumption to 179.63 MMT. It also anticipates a 6.1% reduction in ending stocks to 45.427 MMT.
In summary, current conditions suggest a bearish trend for sugar prices due to favorable weather forecasts in Brazil, a weakening Brazilian real, and various updated production estimates. However, the situation remains fluid with mixed predictions from different organizations regarding future sugar supply and demand, particularly concerning the significant roles of Brazil and India.
Original Source: www.tradingview.com
