On Tuesday, May NY world sugar #11 (SBK25) closed slightly higher at +0.02 (+0.10%), while May London ICE white sugar #5 (SWK25) finished lower at -1.90 (-0.34%).
Sugar prices continued their upward momentum, extending a week-long rally. NY sugar reached a three-week high, while London sugar hit a 3-1/2-month peak due to signs of declining global sugar production.
However, prices pared most of their gains, with London sugar turning negative following indications of weak demand from China.
According to the General Administration of Customs, China’s sugar imports in February plummeted by -97% year-over-year to just 20,000 metric tons (MT).
Global Supply and Production Trends
Last Thursday, Unica reported that cumulative sugar production in Brazil’s Center-South region for the 2024/25 season fell -5.6% year-over-year to 39.822 million metric tons (MMT).
In addition, the Indian Sugar and Bio-energy Manufacturers Association revised its 2024/25 India sugar production estimate downward last Wednesday, reducing its forecast from 27.27 MMT in January to 26.4 MMT, citing lower sugarcane yields.
The Brazilian real (^USDBRL) also provided support for sugar prices. On Tuesday, the real surged to a 4-1/4-month high against the U.S. dollar, discouraging Brazilian sugar producers from engaging in export sales.
Meanwhile, the International Sugar Organization (ISO) updated its projections on March 6, raising its forecast for the 2024/25 global sugar deficit to -4.88 MMT from a previous estimate of -2.51 MMT in November, indicating a tightening market compared to the 2023/24 global sugar surplus of 1.31 MMT.
Furthermore, the ISO revised its 2024/25 global sugar production estimate downward to 175.5 MMT from its earlier projection of 179.1 MMT.
In contrast, Green Pool Commodity Specialists, in a report on February 5, predicted that the global sugar market would shift to a surplus of +2.7 MMT in the 2025/26 season, following an expected deficit of -3.7 MMT in 2024/25.
Bearish Factors Impacting the Market
On the bearish side, last Wednesday’s forecast from consultant Datagro projected that Brazil’s Center-South sugar production for 2025/26 would increase by +6% year-over-year to 42.4 MMT.
Additionally, sugar trader Czarnikow, in a report on February 27, estimated that Brazil’s sugar production in 2025/26 would rise to a record 43.6 MMT, as producing sugar remains more profitable than ethanol.
White Sugar Prices
Another bearish factor is India’s decision to ease sugar export restrictions. On January 20, the Indian government announced it would permit sugar mills to export 1 MMT of sugar this season, relaxing export limits imposed in 2023.
India had restricted sugar exports since October 2023 to ensure sufficient domestic supply. During the 2022/23 season, which ended on September 30, India allowed mills to export only 6.1 MMT of sugar, a sharp decrease from the record 11.1 MMT exported in the prior season.
However, the India Sugar Mills Association (ISMA) projects that the country’s 2024/25 sugar production will drop by -17.5% year-over-year to a five-year low of 26.4 MMT.
The outlook for increased sugar production in Thailand is another bearish signal for prices. On October 29, Thailand’s Office of the Cane and Sugar Board projected that the country’s 2024/25 sugar production would rise by +18% year-over-year to 10.35 MMT, compared to 8.77 MMT in the 2023/24 season, which concluded in April.
Thailand remains the world’s third-largest sugar producer and the second-largest sugar exporter.
Weather and Production Challenges
Adverse weather conditions have also impacted sugar production. Last year, drought and excessive heat triggered fires in Brazil’s top sugar-producing state, São Paulo, damaging crops. Green Pool Commodity Specialists estimated that up to 5 MMT of sugarcane may have been lost due to the fires.
In response, Conab, Brazil’s government crop forecasting agency, revised its 2024/25 Brazil sugar production estimate on November 21, lowering its projection from 46 MMT to 44 MMT due to reduced sugarcane yields caused by drought and extreme heat.
Meanwhile, the USDA, in its bi-annual report released on November 21, projected that global sugar production for 2024/25 would rise by +1.5% year-over-year to a record 186.619 MMT.
It also forecasted that global human sugar consumption for 2024/25 would increase by +1.2% year-over-year to a record 179.63 MMT. Additionally, the USDA estimated that 2024/25 global sugar ending stocks would decline by -6.1% year-over-year to 45.427 MMT.
