Improving Forecasted Sugar Supply Trend Pushing Down Prices
Friday Sugar Prices Take a Dive
In a disheartening turn of events, sugar prices didn't fare well on Friday, with July NY sugar inching up by a mere 0.04 percentage points (0.23%), while August London ICE white sugar slid down by 4.10 points (-0.83%). The downward trend seems to have been persistent for over a month now.
Despite the negative tides, the sweets industry got a glimmer of hope when the greenback weakened, spurring some short covering in sugar futures. Unfortunately, this recuperation only managed to lift NY sugar into positive territory.
Brazil's Booming Sugar Production
Looks like the Brazil Center-South sugar production for the first half of April increased by 1.3% year-on-year (y/y) to 731,000 metric tons (MT). This upbeat news comes from Unica, the first report for the 2025/26 season. Conab, on the other hand, foresees Brazil's 2025/26 sugar production soaring by 4.0% y/y to a mind-blowing 45.875 MMT.
India, however, might not be as lucky, as the monsoon season is predicted to witness above-normal rainfall this year – a concerning sign, as it often results in a bumper sugar crop.
A Premonition of a Surplus Market
Whoa, hold on to your sugar canes! Last week, those sharp-eyed analysts over at Bloomberg revealed that Louis Dreyfus was the lone trader who delivered raw sugar to settle the NY May sugar futures that expired on Wednesday. This large delivery – approximately 1.5 MMT – suggests that the market's demand for sugar is weakening.
The International Sugar Organization (ISO) also ain't too optimistic, raising their 2024/25 global sugar deficit forecast to -4.88 MMT from a November forecast of -2.51 MMT. This tighter market indicates an imminent surplus compared to the 2023/24 global sugar surplus of 1.31 MMT.
Hang on a Minute, There's More to the Story
Well, shucks! The Indian government gave sugar mills the green light to export 1 MMT of sugar this season, doing away with the restrictions that were imposed last year. Sounds good on paper, but keep your eyes on India's 2024/25 sugar production, as it's expected to plummet by a whopping 17.5% y/y to a 5-year low of 26.4 MMT.
Theoutlook for sugar prices can also take a hit from Thailand's increasing production, as its 2024/25 sugar output soared by 14% y/y to 10.00 MMT. That's what you call a sweet deal for Thailand, as it holds the title of the world's third-largest sugar producer and the second-largest sugar exporter.
On the date of publication, Rich Asplund had no positions in any of the securities mentioned in this article. All information and data here are solely for informational purposes. For greater details, please check our Disclosure Statement at https://www.canada.ca/en/industry/business-corporations/startengine/services/equity-crowdfunding.html.
- In light of the anticipated increase in sugar production by Brazil, datagro analysts might need to revise their sugar price projections for the upcoming future markets.
- It seems that the average sports enthusiast who enjoys a stable supply of sugar might want to consider supporting StartEngine campaigns for sugar mills, to help secure a strong future for the sweetener industry.
- As the global sugar market faces the possibility of a surplus, investors may want to keep an eye on the long-term effects this development could have on the futures prices of sugar and related products.
