Sugar Prices Decline Amid Positive Rain Forecasts for Brazil
Sugar prices are down due to forecasts of rain in Brazil, which eases drought concerns and suggests improved yields. Despite earlier gains from lower global production reports, significant sugar deliveries indicate weak demand, and both Brazil and Thailand are expected to increase production, creating further market challenges.
Sugar prices saw a decrease today, with May NY world sugar 11 down by 0.18 and May London ICE white sugar 5 down by 1.40. This shift follows forecasts of rain in Brazil next week, which is expected to alleviate drought concerns and potentially increase sugarcane yields, impacting pricing negatively.
Earlier this week, sugar prices rose to two-week highs, driven by reports of lower global production. Unica revealed that cumulative sugar output in Brazil’s Center-South fell by 5.6% year-on-year. Similarly, the Indian Sugar and Bio-energy Manufacturers Association adjusted its production forecast downwards due to declining cane yields.
The International Sugar Organization has also revised its global sugar deficit projection for 2024/25 to 4.88 million metric tons. Concurrently, it lowered global sugar production expectations to 175.5 million metric tons, indicating a tighter supply compared to prior forecasts.
On a bearish note, significant deliveries of raw sugar were reported by major traders, indicating weak demand. Additonally, a projection from Datagro estimated a 6% increase in Brazil’s Center-South sugar production next season, contributing to this bearish sentiment.
India announced it would permit the export of 1 million metric tons of sugar this season, easing previous restrictions. Despite this, the Indian Sugar Mills Association projects a substantial decline in the country’s sugar production for the 2024/25 season, which could still create domestic supply challenges.
Thailand is expected to boost its sugar production by 18% next year, as stated by the country’s Office of the Cane and Sugar Board. The anticipated increase poses further pressures on global sugar prices.
Last year’s drought and extreme heat in Brazil severely damaged sugar crops in São Paulo, leading to considerable production loss. The Brazilian government forecast agency, Conab, has adjusted its production estimates in light of these adverse conditions.
In summary, sugar prices are currently declining due to expected rainfall in Brazil, easing concerns about drought and improving potential yields. However, the market is also reacting to various reports of diminished global production and increased upcoming supply from both Brazil and Thailand. Compounded by India’s easing of export restrictions, these factors contribute to a complex outlook for sugar pricing.
Original Source: www.tradingview.com
