Sugar prices are experiencing notable declines, with the New York world sugar #11 falling by 1.97% and the London ICE white sugar #5 dropping by 1.76%. These decreases mark a significant trend, with New York sugar price reaching a five-week low and London sugar hitting a two-month low. The market is currently feeling the impact of escalating trade tensions, leading to fears that consumer demand for sugar could diminish. As tariffs increase, the potential for higher sugar prices affecting U.S. consumers enters the conversation.
The recent downturn in WTI crude oil prices has also negatively affected sugar. Crude oil hit a four-year low, which puts downward pressure on ethanol prices. This scenario could drive sugar mills to focus more on sugar production at the expense of ethanol, ultimately increasing sugar supply in the market.
Additionally, the Brazilian real’s depreciation against the U.S. dollar is compounding the bearish sentiment in sugar prices. The real reached a nearly three-month low, promoting more export activity from Brazilian sugar producers who are looking to capitalize on favorable conditions.
On a more positive note for sugar prices, there are signs indicating a decline in global sugar production. The Indian Sugar and Bio-energy Manufacturers Association recently reduced its production forecast for 2024/25 to 26.4 million metric tons (MMT), down from a previous estimate of 27.27 MMT due to disappointing cane yields. Similarly, Brazil’s sugar production has also shown a decline. Reports indicate that as of mid-March, sugar output from Brazil’s Center-South region fell by 5.3% year-over-year, reaching approximately 39.983 MMT.
The International Sugar Organization (ISO) foresaw an increase in the global sugar deficit for the 2024/25 season, now projected at -4.88 MMT, an adjustment from a previous forecast of -2.51 MMT. This reduction reflects a shift from last year’s surplus of 1.31 MMT. The ISO has also lowered its global sugar production estimate to 175.5 MMT, down from an earlier forecast of 179.1 MMT.
However, there are less optimistic forecasts regarding sugar production. For instance, the consultancy Datagro recently anticipated a rebound in Brazil’s sugar production, projecting a 6% increase for the 2025/26 crop year. Furthermore, Green Pool Commodity Specialists noted that the global sugar market might transition to a surplus of 2.7 MMT in the 2025/26 season, following a previous estimate of a deficit of 3.7 MMT for 2024/25.
Another bearish development comes from India, where the government allowed local sugar mills to export 1 MMT during the current season after imposing tight restrictions in 2023 to ensure sufficient domestic supply. In the last season, India exported only 6.1 MMT, a drop from the 11.1 MMT exported in the preceding year. Nonetheless, the Indian Sugar Mills Association projects a significant decrease in domestic sugar production for 2024/25, forecasting a 17.5% reduction to 26.4 MMT, marking a five-year low.
On the other hand, projections for increased sugar production in Thailand may exert additional downward pressure on global prices. The Thai Office of Cane and Sugar Board expects sugar output to surge by 18% to 10.35 MMT for the 2024/25 season, compared to 8.77 MMT from the previous season. Thailand ranks as the third-largest global sugar producer and the second-largest exporter, which could have implications on global sugar pricing dynamics.
In Brazil, adverse weather conditions such as drought and excessive heat have severely affected sugar crops, particularly in São Paulo, the country’s top sugar-producing state. Analysts suggest that up to 5 MMT of sugarcane could have been lost due to these environmental factors. Brazil’s crop forecasting agency, Conab, revised its sugar production estimate for the 2024/25 season down to 44 MMT due to these challenges.
Meanwhile, the U.S. Department of Agriculture (USDA) has projected that global sugar production in 2024/25 could rise by 1.5% to reach a record 186.619 MMT, while consumption is expected to follow suit with an increase of 1.2% to an all-time high of 179.63 MMT. The USDA also anticipates a decline in global sugar ending stocks by 6.1% to approximately 45.427 MMT.
This complex and fluctuating landscape of sugar production and pricing reveals a mix of both supportive and bearish forces influencing the global sugar market.
