On Thursday, sugar prices sharply jumped as Brazil threatened its sugarcane crops as weather forecasters noted high temperatures in growing regions.
US sugar contracts for October delivery increased by 4.25% to $22.06 per pound on September 19’s Asian afternoon session.
A strong Brazilian real boosts prices higher after the currency rallied to a month high against the US dollar. Sugar gained carryover support after Unica mentioned that Center-South production in August’s second half declined by -6.00% year-over-year to 3.26 million metric tons (MMT).
According to Conab, the sweetener’s 2024/25 production estimates were reduced to 42.00 MMT from the previous 42.70 MMT. This reduction was due to weaker yields from the drought and extreme heat.
In India, their Food Ministry lifted restrictions on ethanol-producing sugar mills for 2024/25, potentially prolonging export curbs. Since October 2023, New Delhi has been limiting deliveries to maintain ample domestic supplies.
Meanwhile, the sugarcane crops in Thailand were damaged due to record heat, supporting price hikes. Over three dozen of the nation’s 77 provinces posted excessively high temperatures in April. In addition, it announced the lowest yield from crushed cane this year in almost 13 years.
However, its expected 2023/24 output from December-April spiked to 8.77 MMT, up from the 7.50 MMT February outlook.
Brazil Fires Furthered Sugar Problems
Recently, fires in Brazil brought sugar price gains to a five-week peak, piling up the issues with the sweetener.
Excessive heat and drought from the massive fires in Brazil mainly impacted its top-producing state, Sao Paulo. Based on an industry group, as many as 2,000 outbreaks led to a 5.00 MMT crop loss.
Besides the damage, the calamity’s impact on the crop is limited, which potentially brings adverse factors to the top sugarcane producer.
According to experts, the mills would have slower sugar production from the fires. As a result, problems could arise for the burned fields next year despite the small size of the affected areas.
