Sugar Prices Supported by a Lower Supply Outlook

Today Markets UAEMarch 21, 2025

0 7,443 2 minutes read

May NY world sugar #11 (SBK25) Thursday closed up +0.31 (+1.57%), and May London ICE white sugar #5 (SWK25) closed up +6.60 (+1.18%).

Sugar prices posted moderate gains on Thursday, just below Tuesday’s significant highs. Sugar prices have rallied over the past two weeks, with NY sugar posting a 3-week high Tuesday and London sugar posting a 3-1/2 month high on signs of lower global sugar production.

Last Thursday, Unica reported that cumulative 2024/25 Brazil Center-South sugar output through February fell -5.6% y/y to 39.822 MMT. Also, the Indian Sugar and Bio-energy Manufactures Association cut its 2024/25 India sugar production forecast last Wednesday to 26.4 MMT from a January forecast of 27.27 MMT, citing lower cane yields.

Sugar has support from a stronger Brazilian real (^USDBRL). The real posted a 4-1/2 month high against the dollar Wednesday, discouraging export selling from Brazil’s sugar producers.

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. Last Thursday, the ISO also cut its 2024/25 global sugar production forecast to 175.5 MMT from a November forecast of 179.1 MMT. For its part, 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.

On the bearish side for sugar was last Wednesday’s projection from consultant Datagro that 2025/26 Brazil Center-South sugar production would climb +6% y/y to 42.4 MMT. In addition, sugar trader Czarnikow on February 27 projected Brazil’s 2025/26 sugar production would climb to a record 43.6 MMT since producing sugar is more profitable than ethanol.

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 India Sugar Mills Association (ISMA) projects that India’s 2024/25 sugar production will fall -17.5% y/y to a 5-year low of 26.4 MMT.

The outlook for higher sugar production in Thailand is bearish for sugar prices. On October 29, Thailand’s Office of the Cane and Sugar Board projected that Thailand’s 2024/25 sugar production would jump by +18% y/y to 10.35 MMT. Thailand produced 8.77 MMT of sugar in the 2023/24 season that ended in April. Thailand is the world’s third-largest sugar producer and the second-largest sugar exporter.

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. Conab, Brazil’s government crop forecasting agency, cut its 2024/25 Brazil sugar production estimate from November 21 to 44 MMT from a previous forecast of 46 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.