Sugar prices rose sharply due to reduced production forecasts from Brazil and India, with estimates indicating a global sugar deficit. The Brazilian real’s appreciation constrains exports, while mixed future projections contribute to market volatility. Expectations of increased production in Thailand and revised USDA forecasts create additional dynamics.
Sugar prices experienced a significant rise on Monday, with May NY world sugar 11 closing up by 4.06% and May London ICE white sugar 5 increasing by 4.30%. This surge can be attributed to lower global sugar production estimates, as reported by Unica, indicating a 5.6% year-on-year decline in Brazil’s sugar output through February, alongside India’s reduced forecast from 27.27 MMT to 26.4 MMT due to decreased cane yields.
The appreciation of the Brazilian real against the dollar further accelerated the sugar gains, discouraging export sales from Brazil’s sugar producers. Additionally, the International Sugar Organization raised its global sugar deficit forecast for 2024/25 to 4.88 MMT, indicating a tightening market after previously projecting a surplus. This was compounded by a revised estimate for global sugar production, now set at 175.5 MMT, down from earlier forecasts.
However, some projections indicate a bullish outlook for the future. Datagro forecasts a significant increase in Brazil’s sugar production for the 2025/26 crop year, while Czarnikow estimates an even higher output. Conversely, the Indian government permitted limited sugar exports, which could stabilize its market while also acknowledging a projected downturn in production this coming season.
Thailand’s anticipated increase in sugar production adds a bearish factor to the market, with estimates suggesting an 18% rise to 10.35 MMT due to a favorable harvest outlook. Last year’s drought and heat significantly impacted Brazil’s agricultural output, with an estimated 5 MMT of sugar cane lost to fires in major production areas, leading to adjusted forecasts from Brazil’s government crop agency.
Despite these variations, factors such as the USDA’s projection indicating an overall increase in global sugar production and consumption may balance the market dynamics. Their forecast estimates a record output of 186.619 MMT for 2024/25. All findings and projections, however, serve solely for informational purposes and should be approached with caution due to market volatility.
In summary, sugar prices surged amid declining production estimates from Brazil and India, influenced by factors such as currency fluctuations and reduced forecasts from key organizations. The situation remains complex, with potential increases in production from other regions like Thailand and varying projections from analysts. Drought conditions in Brazil and the USDA’s optimistic production estimates will also play critical roles in shaping the ongoing sugar market dynamics.
Original Source: www.tradingview.com
