On Monday, October NY world sugar #11 (SBV24) fell -0.12 (-0.53%), while December London ICE white sugar #5 (SWZ24) gained 1.30 (+0.23%).

Sugar Pricing

On Monday, sugar prices settled mixed. Sugar prices fell Monday amid expectations that above-average monsoon rains in India would result in a bumper sugar crop. As of September 30, India had received 934.8 mm of rain during the current monsoon season, the highest amount in four years and 7.6% more than the comparable long-term average of 868.6 mm, according to a Monday report from the Indian Meteorological Department. 

After researcher StoneX increased its estimate of the global sugar surplus for 2024–2025 last Friday to 2.0 MMT from a July estimate of 1.2 MMT, citing improved production outlooks in India and Thailand, sugar was already on the defensive. Furthermore, increased sugar production in Brazil is bearish for prices. The Center-South's sugar production for the 2024–25 season as of mid-September is up +3.6% y/y at 30.327 MMT, according to a report released by Unica last Friday.

New York sugar reached a seven-month high last Thursday. Brazil's prospects for producing sugar have been adversely affected by the drought, which has also caused a sharp increase in sugar prices over the last two weeks. Citing excessive dryness, Rabobank lowered its 2024–25 Brazil sugar production forecast from 40.3 MMT to 39.3 MMT on September 20.  

The International Sugar Organization (ISO) predicted on August 30 that there will be a global sugar deficit of -3.58 MMT in 2024–2025—a lot bigger than the projected deficit of -200,000 MT for 2023–2024—which will help sugar prices. The ISO projects that global sugar production will reach 179.3 MMT in 2024–2025, down 1.1% year over year from 181.3 MMT in 2023–2024.    

Global Sugar Production

On August 22, Conab, the Brazilian government's crop forecasting organization, reduced its estimate of sugar production in the Brazil Center South for 2024–2025 from 42.7 MMT to 42 MMT. The reason given was lower sugarcane yields because of the drought and excessive heat.

The Food Ministry of India on August 30 removed limitations on sugar mills manufacturing ethanol for the 2024–2025 year, which begins in November, potentially extending India’s sugar export bans. This is another factor driving up sugar prices. In an effort to increase its sugar reserves, India gave orders to sugar mills in December of last year to cease using sugarcane to make ethanol for the 2023–2024 supply year. Since October 2023, India has limited its sugar exports in order to preserve sufficient domestic supplies. After allowing mills to export a record 11.1 MMT of sugar the previous season, India only permitted mills to export 6.1 MMT of sugar until September 30. The Indian Sugar and Bio-energy Manufacturers Association (ISM) called on the government to remove the current restrictions on sugar exports last Thursday, stating that India will have 2 MMT of sugar to export the following season.

The forecast for increased sugar production in Thailand is negative for the price of sugar.  The Office of the Cane and Sugar Board of Thailand predicted last Tuesday that the country's sugar production in 2024–2025 would reach 10.35 MMT, an increase of +18% year over year.  The 2023–24 season, which concluded in April, saw 8.77 MMT of sugar produced in Thailand. Thailand ranks third globally in terms of sugar production and second in terms of sugar exports.

According to the USDA's bi-annual report, which was made public on May 23, global sugar production is expected to reach a record high of 186.024 MMT in 2024–25, up 1.4% year over year, while global human sugar consumption is expected to rise to a record high of 178.788 MMT, up 0.8% year over year. According to USDA projections, global sugar ending stocks in 2024–2025 would drop 4.7% year over year to 38.339 MMT, a 13-year low.

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REFERENCE- barchart.com

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