On Thursday, sugar futures prices rebounded from Wednesday’s 1 ¼ year low due to robust Brazilian production and an estimated global surplus for 2024/25.
US sugar contract prices for October delivery increased by 4.13% to $18.65 per pound on July 25’s Asian afternoon session.
The potential for improved rain in India and Thailand also boosted the commodity’s prices. Brazil’s center-south production declined by 9.70% in July’s first half compared to the same period last year to 2.94 metric tons.
Moreover, record heat in the country may damage its crops, which is bullish for prices. Weather forecasts from Thailand, the third-largest producer globally, said that over three dozen of its 77 provinces announced record-high temperatures.
According to the industry group UNICA, the rains slowed the crop’s harvesting. The production data was weaker than several analysts expected. Based on an S&P Global Commodity Insights survey, the sugar forecast was 3.14 million tons.
Dealers mentioned that the market was set for an upward correction after the grain hit a 20-month low on Wednesday.
Meanwhile, brokers claimed that the possibility of the UNICA data being leaked might be a reason why the prices rose ahead of its release. On the other hand, the industry group stated that the report is not likely to leak before its official release.
Millers Face Headwinds in Exporting Sugar
Despite the common belief that players in the sugar industry are influential, millers are struggling to export stocks ahead of the next season.
Requests for permission to ship another 850,000 metric tons of the grains in two phases are being refused until domestic market prices stabilize.
According to reports, there are issues regarding the government’s mishandling of sectors like sugar. As a result, they might halt deliveries if prices increase significantly.
However, there are signs that higher taxes and duties to be paid can justify raising thresholds. Also, surpluses can be an opportunity to ship the crop before the upcoming season starts to demand export rights.
