Sugar Prices Decline Amid Brazil Rain Forecasts and Production Dynamics
Sugar prices have declined due to rain forecasts in Brazil, easing concerns regarding sugarcane yields. The International Sugar Organization has revised its global sugar deficit for 2024/25, and other forecasts indicate both increases in production and weak demand. Brazil’s anticipated rain may bolster production, while India’s export policies and competition from Thailand complicate the market outlook.
Sugar prices have decreased slightly due to anticipated rain forecasts in Brazil, with May NY world sugar down 0.18% and May London ICE white sugar falling 0.26%. The rain, predicted by Somar Meteorologia, is expected to alleviate dryness concerns and improve sugarcane yields, thus influencing market dynamics.
Despite this dip, sugar prices recently reached two-week highs on reports of reduced global sugar production. The latest from Unica indicated that cumulative sugar output in Brazil’s Center-South region has decreased by 5.6% year-on-year as of February, reported at 39.822 million metric tons (MMT). Additionally, the Indian Sugar and Bio-energy Manufacturers Association cut its 2024/25 forecast for India to 26.4 MMT, citing lower yields.
The International Sugar Organization (ISO) has adjusted its projection for the 2024/25 global sugar deficit, raising it to 4.88 MMT, signaling a tighter market condition. Furthermore, the organization’s forecast for global sugar production has been revised down to 175.5 MMT. Green Pool Commodity Specialists predict a return to a surplus in the global sugar market by the 2025/26 crop year.
Recent trends have also indicated weak demand, contributing to falling prices. Following record deliveries of raw sugar amounting to 1.7 MMT against the March NY futures contract, sugar prices declined to seven-week lows. This was due to reduced selling opportunities for sellers, traditionally seen as a bearish indicator.
Bearish developments include projections from Datagro predicting a 6% increase in Brazil’s 2025/26 sugar production and Czarnikow forecasting even higher production. Additionally, India has lifted export restrictions temporarily, permitting mills to export one million tons this season and indicating potential oversupply.
Thailand is also likely to impact the sugar market negatively, with projections showing an 18% rise in production for the 2024/25 season. Thailand remains a significant player in sugar exports, compounding the bearish sentiment in the market.
Brazil’s sugar production remains compromised due to past droughts and fires which have depleted sugarcane supplies. Conab’s recent estimates suggest a reduction in Brazil’s sugar output to 44 MMT, attributed to lower yields.
The USDA anticipates a 1.5% overall increase in global sugar production and a 1.2% rise in human sugar consumption for 2024/25, though ending stocks are predicted to decrease by 6.1%.
In summary, sugar prices face downward pressure due to favorable rain forecasts for Brazil, initial gains associated with lower global production forecasts, and concerns surrounding weak demand. The modifications in export policies in India, projected increases in production in both Brazil and Thailand, and adverse weather impacts from previous seasons continue to influence market dynamics. The sugar market’s future direction appears uncertain, primarily influenced by these competing factors.
Original Source: www.tradingview.com
