Sugar prices appreciating due to enhanced supply outlook
Today's July NY world sugar #11, aka SBN25, dropped -0.29%, hitting a 3-3/4 year low. August London ICE white sugar #5, or SWQ25, also saw a -0.89% decrease.
Sugar prices keep sliding, mirroring a month-long selloff. The predictions of higher Brazil sugar production have been weighing on prices. On Wednesday, Unica reported that Brazil Center-South sugar production for the first half of April increased by 1.3% y/y to 731,000 MT. This is the initial report for the 2025/26 season. On Tuesday, Conab projected that Brazil's 2025/26 sugar production would surge by 4.0% y/y to 45.875 MMT.
Meanwhile, it's not just Brazil driving the supply surge. Bloomberg reported that Louis Dreyfus was the only trader to deliver raw sugar to settle the NY May sugar futures, which expired on Wednesday. About 1.5 MMT of sugar was delivered, marking the fifth-largest delivery for the contract in the past five years. This hefty delivery suggests weak demand for sugar.
Adding to the gloom, the USDA's Foreign Agricultural Service predicts that Brazil's 2025/26 sugar production would grow by 2.3% y/y to 44.7 MMT from 43.7 MMT in the previous season. Furthermore, the outlook for abundant rain in India leading to a bumper sugar crop is dampening 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.
Consultant Datagro predicted that 2025/26 Brazil Center-South sugar production would increase by 6% y/y to 42.4 MMT. Green Pool Commodity Specialists, in turn, suggests that the worldwide sugar market will transition to a surplus of +2.7 MMT in the 2025/26 crop year, contrasting with their initial estimate of a deficit of -3.7 MMT in 2024/25.
On the brighter side, India's government recently said they would allow sugar mills to export 1 MMT of sugar this season, easing the restrictions on sugar exports imposed in 2023. However, the ISMA projects that India's 2024/25 sugar production will fall by 17.5% y/y to a 5-year low of 26.4 MMT. Indian Food Secretary Chopra also stated that India's 2024/25 sugar exports may only total 800,000 MT, below earlier expectations of 1 MMT.
The outlook for higher production in Thailand adds to bearish sentiment for sugar prices. Last Friday, Thailand's Office of the Cane and Sugar Board reported that Thailand's 2024/25 sugar production rose by 14% y/y to 10.00 MMT. Thailand is the world's third-largest sugar producer and the second-largest sugar exporter.
On a positive note, India's sugar production from October 1-April 15 was 25.5 MMT, down 18% from the same period last year, according to the Indian Sugar and Bio-Energy Manufacturers Association (ISMA). This might offer some support to sugar prices in the future.
Although the global sugar market faces increased supply, shifts in consumption patterns and policy changes continue to shape the scene. Keep an eye on these factors for the latest insights on the sugar market.
- By 2025, the rise in sugar production is expected to impact the global food-and-drink market, threatening the lifestyle of numerous consumers who heavily rely on sugar-rich products.
- Amidst falling sugar prices, an exporter like India is considering easing restrictions on sugar exports in the 2022-2023 season, aiming to supply more sugar and balance the market.
- The surging production of sugar in Thailand, the world's third-largest producer and second-largest exporter, fuels a bearish sentiment in the international food-and-drink market.
- More abundant rainfall forecasted for India in the upcoming monsoon season is predicted to lead to a bumper sugar crop and exacerbate the already declining sugar prices. Meanwhile, increasing technology innovation in agriculture could potentially alter the future supply and demand dynamics of the sugar market.
