Sugar prices fell on Friday for the third consecutive day, largely due to a weakening Brazilian real and revised deficit forecasts for the global sugar market. Current projections indicate decreasing sugar production in key regions, while contrasting forecasts from other countries point towards evolving supply dynamics in the coming years.
On Friday, May NY world sugar 11 (SBK25) decreased by 0.37 cents, marking a decline of 1.96%, while May London ICE white sugar 5 (SWK25) fell by 7.10 cents or 1.32%. Sugar prices have now dropped for three consecutive days, reaching their lowest levels in two weeks. This downturn is attributed to the weakening of the Brazilian real and a revised forecast from C for a significant global sugar deficit next year, projected at 4.88 million metric tons (MMT), up from 2.51 MMT in a previous estimate.
Moreover, the ISO has lowered its forecast for global sugar production in 2024/25 to 175.5 MMT, compared to the previous estimate of 179.1 MMT. In contrast, Green Pool Commodity Specialists projected a shift to a surplus of 2.7 MMT in the 2025/26 crop year, reversing the expected deficit of 3.7 MMT in 2024/25. This indicates a tightening market from the surplus of 1.31 MMT seen in the preceding crop year.
Sugar prices briefly surged to a two-and-a-half-month high earlier in the week, bolstered by the Brazilian real hitting a three-and-a-half-month peak against the dollar, which led sugar producers to refrain from exporting. Additionally, support for sugar prices is seen in the news that India’s sugar production has decreased by 14% year-over-year to 21.98 MMT for the current marketing year.
Concerns remain regarding Brazil’s sugar production, as noted by Alvean, the world’s largest sugar trader. Below-average rainfall has led to stunted sugarcane growth in some regions, potentially delaying the upcoming harvest and impacting overall production. Conversely, the Indian government has authorized its mills to export 1 MMT of sugar this season, easing restrictions in place since October 2023.
Furthermore, projections for India’s sugar production in 2024/25 foresee a 15% year-over-year decline, reaching a five-year low of 27.27 MMT. On a global scale, the outlook for Thailand’s sugar production remains bearish, with an anticipated 18% increase to 10.35 MMT in 2024/25. This increase is notable given that Thailand is ranked as the world’s third-largest sugar producer.
In Brazil, the impact of drought and extreme temperatures last year has caused significant damages to sugar crops, particularly in the key producing state of Sao Paulo. Reports indicate that as much as 5 MMT of sugarcane may have been lost due to fires. The Brazilian government crop forecasting agency, Conab, has revised its production estimate downward, now predicting 44 MMT for 2024/25, owing to lower yield expectations.
Additionally, the USDA has projected a 1.5% increase in global sugar production for 2024/25, potentially reaching a historic high of 186.619 MMT, while consumption is also anticipated to rise by 1.2% to 179.63 MMT. Ending stocks are predicted to decline by 6.1% year-over-year to 45.427 MMT.
To summarize, amid fluctuating production forecasts and market dynamics, sugar prices continue to face downward pressure due to the weak Brazilian real and anticipated changes in global supply and demand dynamics. As various countries adjust their production expectations, the sugar market may remain volatile in the coming months.
In conclusion, the sugar market faces significant volatility attributed to multiple factors, including currency fluctuations, production forecasts, and environmental challenges. The weakening of the Brazilian real and evolving forecasts for global production and consumption underscore the complexities shaping sugar prices today. Ongoing monitoring of these dynamics will be essential for stakeholders in the sugar industry.
Original Source: www.tradingview.com
