On Wednesday, sugar prices surged as Brazil experienced drought weather conditions, cutting Brasilia’s output forecast and pushing costs for over two weeks.
In the Asian morning session, US sugar futures for October contracts closed the trading session by rising 1.95% to $23.57 per pound.
According to reports, Rabobank revealed last week that it reduced Brazil’s sugar production prospect to 39.30 million metric tons (MMT) from the last outlook of 40.30 MMT.
Furthermore, dry periods and excessive heat have caused fires in Brasilia that battered the sweetener crops in Sao Paulo.
Orplana, a sugar cane industry group, revealed that as many as 2,000 fire outbreaks have damaged over 80,000 hectares of crops in the state. The fires also led to a 5.00 MMT loss of sugar crops.
Moreover, the International Sugar Organization has projected a 2024/25 global sweetener decline of -3.58 MMT, higher than the anticipated -200,000 MT deficit for 2023/24.
The organization also forecasted this year’s global sugar yield of 179.30 MMT, down by -1.10% year-over-year (YoY) from previous data of 181.30 MMT.
Meanwhile, Conab revealed that it reduced its 2024/25 sugar production estimate for the Center-South region to 42.00 MMT, down from an earlier forecast of 42.70 MMT. The revision was due to lower sugarcane production caused by drought and excessive heat.
India and Thailand Cover Brazil’s Sugar Output Loss
India and Thailand have been compensating for Brazil’s loss of supplies amid wildfires and drought, which unsettled the global sugar market.
However, New Delhi and Bangkok covering Brasilia’s production loss could batter sugar prices.
A negative factor for sugar prices is the optimism that above-average monsoon rains in India will result in a bumper sugar harvest.
According to reports, the Indian Sugar and Bio-energy Manufacturers Association unveiled the country’s 2023/24 sweetener stocks at 9.10 MMT and a 3.60 MMT surplus.
Meanwhile, Thailand’s Office of the Cane and Sugar Board has forecasted that the country’s sugar production for the 2024/25 season will increase by 18.00% YoY to 10.35 MMT. In the 2023/24 season, which concluded in April, Bangkok produced 8.77 MMT of sugar.
