May NY world sugar #11 (SBK25) today is up +0.32 (+1.83%), and August London ICE white sugar #5 (SWQ25) is up +6.70 (+1.37%).
Sugar prices today are moderately higher as a weaker dollar (DXY00) sparked short-covering in sugar futures. Sugar prices have been on the defensive this week, with NY sugar posting a 2-1/2 year nearest-futures low Tuesday and London sugar posting a 2-3/4 month low today. The outlook for abundant rain in India that leads to a bumper sugar crop is undercutting sugar prices. On Tuesday, 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.
Sugar prices are also weighed down by concerns the global trade war will undercut world economic growth and as the tariffs raise sugar prices for consumers.
Last Wednesday's plunge in WTI crude oil (CLK25) to a 4-year low was bearish for sugar prices. Weakness in crude oil undercuts ethanol prices, which may prompt the world's sugar mills to divert more cane crushing to sugar production rather than ethanol, thus boosting sugar supplies.
Also, on the negative side, consultant Datagro on March 12 projected that 2025/26 Brazil Center-South sugar production would climb +6% y/y to 42.4 MMT. In addition, Green Pool Commodity Specialists on February 5 projected that the worldwide sugar market will shift to a surplus of +2.7 MMT in the 2025/26 crop year from its estimate of a deficit of -3.7 MMT in 2024/25.
In a bearish factor, the Indian government said on January 20 that it would allow its sugar mills to export 1 MMT of sugar this season, easing the restrictions placed on sugar exports in 2023. India has restricted sugar exports since October 2023 to maintain adequate domestic supplies. India allowed mills to export only 6.1 MMT of sugar during the 2022/23 season to September 30 after allowing exports of a record 11.1 MMT in the previous season. However, the India Sugar Mills Association (ISMA) projects that India's 2024/25 sugar production will fall -17.5% y/y to a 5-year low of 26.4 MMT.
The outlook for higher sugar production in Thailand is bearish for sugar prices. On October 29, Thailand's Office of the Cane and Sugar Board projected that Thailand's 2024/25 sugar production would jump by +18% y/y to 10.35 MMT. Thailand produced 8.77 MMT of sugar in the 2023/24 season that ended in April. Thailand is the world's third-largest sugar producer and the second-largest sugar exporter.
Signs of lower global sugar production are supportive of prices. Unica reported Monday that the cumulative 2024/25 Brazil Center-South sugar output through March fell by 5.3% y/y to 40.169 MMT. On March 12, the Indian Sugar and Bio-energy Manufacturers Association cut its 2024/25 India sugar production forecast to 26.4 MMT from a January forecast of 27.27 MMT, citing lower cane yields.
Meanwhile, the International Sugar Organization (ISO) on March 6 raised its 2024/25 global sugar deficit forecast to -4.88 MMT from a November forecast of -2.51 MMT, showing a tightening market from the 2023/24 global sugar surplus of 1.31 MMT. The ISO also cut its 2024/25 global sugar production forecast to 175.5 MMT from a November forecast of 179.1 MMT.
Drought and excessive heat last year caused fires in Brazil that damaged sugar crops in Brazil's top sugar-producing state of Sao Paulo. Green Pool Commodity Specialists noted that as much as 5 MMT of sugar cane may have been lost due to the fires. Conab, Brazil's government crop forecasting agency, cut its 2024/25 Brazil sugar production estimate from November 21 to 44 MMT from a previous forecast of 46 MMT, citing lower sugarcane yields due to drought and excessive heat.
The USDA, in its bi-annual report released November 21, projected that global 2024/25 sugar production would climb +1.5% y/y to a record 186.619 MMT and that global 2024/25 human sugar consumption would increase +1.2% y/y to a record 179.63 MMT. The USDA also forecasted that 2024/25 global sugar ending stocks would decline -6.1% y/y to 45.427 MMT.
