The Brazilian real is depreciating against the dollar today, pushing down sugar prices to a one-week low. This has encouraged Brazilian sugar producers to market their products abroad. Over the last seven weeks, prices have decreased as a result of Brazil's increasing sugar output. Due to forecasts of plentiful sugar supply worldwide, London sugar fell to a 1.25-year low last Thursday while sugar in New York touched a 1.5-year low.
Looking for sugar suppliers? Brazil's sugar output increased significantly in the second half of April, rising 84.0% year over year to 1,843 MMT, according to data released by Unica on Wednesday. In the marketing year 2024–2025 (April–March), the output of sugar increased by 65.9% year over year to 2.558 MMT. With 46.96% of sugarcane earmarked for sugar production, Brazilian sugar mills have prioritised crushing cane for sugar above producing ethanol.
India Extends Export Restrictions, Thai Production Faces Challenge
To guarantee a sufficient domestic supply, India decided to prolong its ban on sugar exports till further notice. Just 6.1 MMT were allowed during the 2022-2023 season, following a record-breaking 11.1 MMT in the previous season. The law was passed by India, the second-largest sugar producer in the world.
The unusual heat in Thailand is endangering sugarcane harvests, which raises the price of sugar. Concerns are growing for buyers looking to buy bulk sugar as over half of Thailand's regions are seeing record-high temperatures, along with less rainfall and the El Niño influence. The lowest cane production in thirteen years, according to Thai sugar millers. In spite of this, the government projects that sugar output will reach 8.77 MMT in 2023–2024—a higher amount than anticipated. Thailand is ranked second in exports and third in the world for sugar production.
End of El Niño and Record Sugar Production Could Ease Global Supply Concerns
According to NOAA, the previous El Nino weather phenomena will terminate this month, and the tropical Pacific will change to neutral conditions. This should improve South American and Asian weather patterns and increase sugar crop production worldwide.
In its biannual report, which was made public on November 23, the USDA predicted that worldwide sugar production would reach a record high of 183.461 MMT in 2023-2024, up 4.7% year over year, and that global human sugar consumption would rise to a record high of 178.431 MMT, up 1.2% year over year. Additionally, the USDA predicted that worldwide sugar ending stocks in 2023-2024 would drop -13.3% year over year to 33.681 MMT, a 13-year low. On February 28, the International Sugar Organization (ISO) revised its projection of the global sugar shortfall for 2023-2024 from a November estimate of -335,000 MT to -689,000 MT.
Conclusion
In summary, the weakening of the Brazilian real has driven sugar prices down, leading to increased exports from Brazilian seller looking to sell bulk sugar. Factors such as Brazil's rising sugar output, India's extended export ban, and challenges in Thai production have affected global sugar markets. However, the end of the El Nino weather event and record-high sugar production globally may alleviate supply concerns in the near future.
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