Sugar prices have fallen due to rain forecasts in Brazil, easing dry conditions that could improve cane yields. Reports indicate declining global sugar production and increased supply from other regions, including Thailand and India, impacting market dynamics.
Recent forecasts indicate a decrease in sugar prices, with May New York world sugar 11 down by 0.94% and May London ICE white sugar 5 down by 0.26%. The decline is attributed to predicted rain in Brazil, which is expected to alleviate dryness concerns and potentially enhance sugarcane yields.
Earlier this week, sugar prices surged to two-week highs due to reports of reduced global sugar production. Notably, Unica disclosed that sugar output through February decreased by 5.6% year-on-year. India is also adjusting its forecast, lowering expected sugar production to 26.4 million metric tons due to diminished cane yields.
The International Sugar Organization has revised its global sugar deficit forecast to a greater extent, predicting a deficit of 4.88 million metric tons for 2024/25 compared to 2.51 million metric tons previously forecasted. They also decreased the global sugar production estimate to 175.5 million metric tons, reflecting a more constrained market compared with the previous surplus.
Recently, sugar prices dipped to seven-week lows, influenced by signs of weakened demand, particularly following significant deliveries against futures contracts. These deliveries indicate a bearish market trend, as substantial supplies suggest diminished alternative markets for sellers.
The Brazilian sugar production outlook remains concerning; however, reports suggest increased production expected in Brazil’s Center-South region for the 2025/26 season. Concurrently, the Indian government has begun permitting sugar exports, though projections indicate a significant fall in domestic production for 2024/25.
Moreover, Thailand anticipates an increase in sugar production for the upcoming season, which adds pressure on sugar prices. The overall agricultural conditions, particularly droughts and excessive heat damaging Brazilian crops in the past year, further complicate production forecasts, prompting governmental authorities to revise estimates downward.
The USDA projects a slight rise in global sugar production for 2024/25, accompanied by an anticipated increase in consumption. This presents a mixed outlook for the sugar market, as altering consumption patterns and production levels create an unpredictable environment.
In summary, sugar prices are currently responding to favorable weather forecasts in Brazil and revisions in global production estimates. The market shows signs of both tightening supply conditions and potential increases in production, especially from Brazil and Thailand. With India easing export restrictions while also facing production declines, the landscape remains complex and meritous of close scrutiny in upcoming trade sessions.
Original Source: www.tradingview.com
