NY Sugar Gives Up Early Gains as the Brazilian Real Falls

Today Markets UAEMay 7, 2025

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July NY world sugar #11 (SBN25) Tuesday closed down -0.03 (-0.17%), and August London ICE white sugar #5 (SWQ25) closed up +4.10 (+0.84%).

Sugar prices on Tuesday fell from early highs and settled mixed. Long liquidation in NY sugar futures emerged Tuesday after the Brazilian real (^USDBRL) fell to a 2-week low against the dollar. The weaker real encourages export selling from Brazil’s sugar producers.

Last Friday, July NY sugar posted a 3-3/4 year nearest-futures low, and London sugar posted a 2-week low on the outlook for higher Brazil sugar production. Last Wednesday, Unica reported that Brazil Center-South sugar production for the first half of April rose +1.3% y/y to 731,000 MT. Last Wednesday’s report from Unica is the first report for the 2025/26 season. Last Tuesday, Conab forecasted Brazil’s 2025/26 Brazil sugar production would climb +4.0% y/y to 45.875 MMT.

Last Thursday, Bloomberg reported that Louis Dreyfus was the only trader to deliver raw sugar to settle the NY May sugar futures that expired on Wednesday. About 1.5 MMT of sugar was delivered to settle the May futures contract, the fifth-largest for the contract in 5 years, according to StoneX. The large delivery signals weak sugar demand.

Signs of larger global sugar output are negative for prices. On Tuesday, the USDA’s Foreign Agricultural Service (FAS) predicted that India’s 2025/26 sugar production would rise +26% y/y to 35 MMT, citing favorable monsoon rains and increased sugar acreage. On April 23, the USDA’s FAS predicted that Brazil’s 2025/26 sugar production would climb +2.3% y/y to 44.7 MMT from 43.7 MMT in the previous season.

The outlook for abundant rain in India that leads to a bumper sugar crop is undercutting sugar prices. On April 15, India’s Ministry of Earth Sciences projected an above-normal monsoon this year, with total rainfall forecast to be 105% of the long-term average. India’s monsoon season runs from June through September.

Also, on the negative side, consultant Datagro on March 12 projected that 2025/26 Brazil Center-South sugar production would climb +6% y/y to 42.4 MMT. In addition, Green Pool Commodity Specialists on February 5 projected that the worldwide sugar market will shift to a surplus of +2.7 MMT in the 2025/26 crop year from its estimate of a deficit of -3.7 MMT in 2024/25.

In a bearish factor, the Indian government said on January 20 that it would allow its sugar mills to export 1 MMT of sugar this season, easing the restrictions placed on sugar exports in 2023. India has restricted sugar exports since October 2023 to maintain adequate domestic supplies. India allowed mills to export only 6.1 MMT of sugar during the 2022/23 season to September 30 after allowing exports of a record 11.1 MMT in the previous season. However, the ISMA projects that India’s 2024/25 sugar production will fall -17.5% y/y to a 5-year low of 26.4 MMT. Also, on April 17, the ISMA reported that India’s sugar production from Oct 1-Apr 15 was 25.5 MMT, down -18% from the same period last year. In addition, Indian Food Secretary Chopra said last Thursday that India’s 2024/25 sugar exports may only total 800,000 MT, below earlier expectations of 1 MMT.

The outlook for higher sugar production in Thailand is bearish for sugar prices. Last Friday, Thailand’s Office of the Cane and Sugar Board reported that Thailand’s 2024/25 sugar production rose +14% y/y to 10.00 MMT. Thailand is the world’s third-largest sugar producer and the second-largest sugar exporter.

Signs of lower global sugar production are supportive of prices. Unica reported on April 14 that the cumulative 2024/25 Brazil Center-South sugar output through March fell by 5.3% y/y to 40.169 MMT. On March 12, the Indian Sugar and Bio-energy Manufacturers Association cut its 2024/25 India sugar production forecast to 26.4 MMT from a January forecast of 27.27 MMT, citing lower cane yields.

Meanwhile, the International Sugar Organization (ISO) on March 6 raised its 2024/25 global sugar deficit forecast to -4.88 MMT from a November forecast of -2.51 MMT, showing a tightening market from the 2023/24 global sugar surplus of 1.31 MMT. The ISO also cut its 2024/25 global sugar production forecast to 175.5 MMT from a November forecast of 179.1 MMT.

Drought and excessive heat last year caused fires in Brazil that damaged sugar crops in Brazil’s top sugar-producing state of Sao Paulo. Green Pool Commodity Specialists noted that as much as 5 MMT of sugar cane may have been lost due to the fires. Last Thursday, Conab, Brazil’s government crop forecasting agency, projected 2024/25 Brazil sugar production to fall -3.4% y/y to 44.118 MMT, citing lower sugarcane yields due to drought and excessive heat.

The USDA, in its bi-annual report released November 21, projected that global 2024/25 sugar production would climb +1.5% y/y to a record 186.619 MMT and that global 2024/25 human sugar consumption would increase +1.2% y/y to a record 179.63 MMT. The USDA also forecasted that 2024/25 global sugar ending stocks would decline -6.1% y/y to 45.427 MMT.