NY Sugar Prices Decline as Rain Forecasts Support Cane Yields in Brazil

New York sugar prices fell due to rain forecasts for Brazil, which may increase sugarcane yields. This follows earlier highs driven by declining global production. Reports indicate that global deficits are widening, and production estimates for countries like Brazil and India have been revised downward, impacting the market outlook.

New York sugar prices declined on Friday, with a decrease of 0.31%, closing at -0.06, while London ICE white sugar prices rose by 0.52%. The decline in New York prices followed forecasts of rain in Brazil next week, which are expected to alleviate dryness concerns and subsequently enhance sugarcane yields.

Initially, sugar prices had risen to a two-week high earlier in the week due to indications of diminished global sugar production. Reports from Unica indicated that cumulative sugar output in Brazil’s Center-South region for the 2024/25 period decreased by 5.6% year-on-year to 39.822 million metric tons. Additionally, the Indian Sugar and Bio-energy Manufacturers Association revised its sugar production forecast for 2024/25 down to 26.4 million metric tons from an earlier estimate of 27.27 million metric tons, citing reduced cane yields.

The International Sugar Organization projected an increase in the global sugar deficit forecast for 2024/25 to 4.88 million metric tons, reflecting tighter market conditions compared to the 2023/24 surplus of 1.31 million metric tons. Moreover, the global sugar production forecast was lowered to 175.5 million metric tons from a previous forecast of 179.1 million metric tons. Green Pool Commodity Specialists also noted that the global sugar market is anticipated to transition to a surplus of 2.7 million metric tons in the 2025/26 crop year, following an estimated deficit of 3.7 million metric tons in 2024/25.

However, sugar prices faced downward pressure as demand showed signs of weakness. This was reflected in significant deliveries of 1.7 million metric tons of raw sugar against the March NY futures contract, indicating challenges for sellers in finding alternative markets. Additionally, Datagro’s projection of Brazil’s Center-South sugar production reaching 42.4 million metric tons for 2025/26 suggested an increase of 6% year-on-year, which could further suppress prices.

Moreover, the Indian government announced plans to allow sugar mills to export 1 million metric tons of sugar during the current season, after previously imposing restrictions. The Indian Sugar Mills Association projected a significant decline in India’s sugar production for 2024/25, anticipating a 17.5% year-on-year decrease to 26.4 million metric tons, marking a five-year low.

Thailand is also expected to boost sugar production significantly, with projections indicating an 18% year-on-year increase to 10.35 million metric tons for 2024/25, following a production of 8.77 million metric tons in the previous season. As the world’s third-largest sugar producer, this increase further complicates the pricing landscape.

Significant natural disasters impacted Brazilian sugar production, particularly last year’s drought and excessive heat, which caused widespread fires in São Paulo, the leading sugar-producing state. Green Pool estimated that these events resulted in losses of up to 5 million metric tons of sugar cane. Additionally, Brazil’s CONAB reduced its 2024/25 sugar production estimate to 44 million metric tons due to these adverse conditions.

The USDA forecasted a slight increase in global sugar production for the 2024/25 year, projecting it would rise by 1.5% to a record 186.619 million metric tons, while human sugar consumption is expected to rise by 1.2% to 179.63 million metric tons. However, global sugar ending stocks are projected to decline by 6.1% to 45.427 million metric tons, indicating a tightening supply.

In summary, New York sugar prices have decreased due to forecasted rain in Brazil, which is anticipated to improve sugarcane yields. Despite this, indications of reduced global sugar production and demand constraints continue to exert downward pressure on prices. The market is also facing uncertainty stemming from evolving production forecasts in key sugar-producing countries, particularly Brazil and India.

Original Source: www.tradingview.com