Analysis of Current Trends in Global Sugar Prices due to Brazilian Conditions
Recent rainfall forecasts for Brazil, along with a weakening Brazilian real, are causing sugar prices to decline to two-week lows. Global production estimates have been revised downwards due to lower yields in major producing countries, while Thailand expects a significant increase in sugar output. Overall, market dynamics indicate a tightening supply against rising global consumption.
Sugar prices continue to decline, reaching two-week lows, with May NY world sugar 11 down 0.15 (-0.79%) and May London ICE white sugar 5 down 1.90 (-0.35%). This decline is primarily attributed to forecasted rains in Brazil’s sugar-growing regions, easing concerns about dryness, as reported by meteorologist Climatempo. The anticipated showers are expected to continue into next week, further influencing market dynamics.
Additionally, the Brazilian real has weakened, hitting a two-week low, which promotes export selling by Brazilian sugar producers. Last week, NY sugar reached a one-month high while London sugar achieved a four-month high, spurred by indications of declining global sugar production. On March 12, the Indian Sugar and Bio-energy Manufacturers Association revised its 2024/25 sugar production forecast downward, citing lower cane yields.
Reports from Unica indicated a 5.3% year-on-year decrease in Brazil’s cumulative sugar output for 2024/25 through mid-March, totaling 39.983 million metric tons (MMT). Moreover, Czarnikow revised its Brazil 2025/26 sugar production estimate from 43.6 MMT to 42 MMT. In contrast, the International Sugar Organization raised its global sugar deficit forecast to -4.88 MMT and cut the global production forecast to 175.5 MMT for the 2024/25 cycle.
Despite the bearish trends, Datagro anticipates a 6% increase in Brazil’s sugar production for 2025/26, predicting 42.4 MMT. Additionally, Green Pool Commodity Specialists expect a market surplus in 2025/26, a significant shift from the projected deficit in the previous crop year. Furthermore, India’s government plans to permit the export of 1 MMT of sugar this season, which could reduce domestic supply constraints.
Similarly, increased sugar production outlooks in Thailand pose bearish implications for sugar prices. The Office of the Cane and Sugar Board predicts an 18% year-on-year rise in Thailand’s sugar output for 2024/25, reaching 10.35 MMT. However, Brazilian sugar crops have faced damage due to drought and excessive heat leading to losses of 5 MMT. Brazil’s Conab agency has adjusted its sugar production estimate down to 44 MMT, citing lower yields caused by these climatic factors.
The USDA projects a 1.5% year-on-year increase in global sugar production for 2024/25, estimating a record of 186.619 MMT alongside a rise in global sugar consumption to 179.63 MMT. Ending stocks are expected to drop 6.1% to 45.427 MMT in the same period.
The recent decline in sugar prices is influenced by forecasts of rain in Brazil, which alleviates concerns over dryness, and a weakened Brazilian real stimulating exports. Adjustments in global production forecasts, with significant reductions noted in both Brazil and India, suggest tightening supply amid increasing consumption forecasts. Bullish projections from Thailand and potential surpluses pose additional challenges to sugar market stability moving forward.
Original Source: www.tradingview.com
