Sugar Market Prices Stabilize Amidst Global Supply Shifts

March NY world sugar #11 (SBH25) is trading slightly lower by -0.03 (-0.14%), while March London ICE white sugar #5 (SWH25) has seen a marginal increase of +0.60 (+0.11%).

Sugar prices are currently consolidating, holding above the significant lows recorded on Monday. A weaker US dollar has prompted some mild short-covering within sugar futures markets.

Following recent downward trends, where NY sugar hit a 2.5-month low and London sugar reached a 3-week low on Monday, prices are being pressured by improving global supply outlooks. On November 21, the International Sugar Organization (ISO) reduced its 2024/25 global sugar deficit forecast to -2.51 MMT, down from the August estimate of -3.58 MMT. Furthermore, the ISO raised its 2023/24 global sugar surplus projection to 1.31 MMT, up from an August projection of +200,000 MT.

The volatility of the Brazilian real (^USDBRL) is also acting as a bearish driver. Following the real’s record low against the dollar last Friday, the weaker currency encourages Brazilian producers to increase export selling.

Conversely, a decline in Brazil’s Center-South sugar production is providing market support. According to Unica, sugar output in the Center-South region fell by 59.2% year-on-year to 898 MT during the first half of November. Cumulative 2024/25 output for the region through mid-November is down 3.0% year-on-year to 38.274 MMT.

Earlier drought and extreme heat caused significant crop damage due to fires in the state of Sao Paulo, Brazil’s primary sugar-producing region. The industry group Orplana reported that roughly 2,000 fire outbreaks affected up to 80,000 hectares of sugarcane. Green Pool Commodity Specialists estimated potential losses of up to 5 MMT of sugarcane. Consequently, Conab, Brazil’s government forecasting agency, reduced its overall 2024/25 production estimate to 44 MMT from a previous forecast of 46 MMT, citing lower yields due to weather extremes.

In contrast, rising production forecasts from Thailand present a bearish outlook. On October 29, Thailand’s Office of the Cane and Sugar Board projected that the nation’s 2024/25 sugar production would increase by 18% year-on-year to 10.35 MMT. Thailand remains the world’s third-largest producer and second-largest exporter, having produced 8.77 MMT in the 2023/24 season.

In a move that supports prices, India’s Food Ministry lifted restrictions on sugar mills producing ethanol for the 2024/25 year starting in November, potentially prolonging India’s export curbs. India has maintained sugar export restrictions since October 2023 to protect domestic supplies. While the Indian Sugar and Bio-energy Manufacturers Association (ISM) noted that India will have approximately 2 MMT available for export next season, the government has historically strictly regulated these volumes to maintain local stocks.

Regarding production trends, the ISM reported that India’s 2023/24 sugar production (Oct-Apr) fell 1.6% year-on-year to 31.4 MMT. The association also projected that 2024/25 production would decrease by 2% to 33.3 MMT, with domestic reserves expected to sit at 8.4 MMT by September 30.

Furthermore, the ISO forecasted 2024/25 global sugar production at 179.3 MMT, representing a 1.1% decrease from the 181.3 MMT recorded in 2023/24.

Finally, the USDA’s bi-annual report released on November 21 projected that global 2024/25 sugar production will rise 1.5% to a record 186.619 MMT. During the same period, global human consumption is expected to grow by 1.2% to a record 179.63 MMT, while global ending stocks are forecasted to decline by 6.1% to 45.427 MMT.

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