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Global Sugar Market Sees Modest Gains Amid Mixed Production Trends and Economic Signals

8 Jan 2025 9:32 am
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MUMBAI, 08 Jan (Commoditiescontrol): Raw sugar prices on the Intercontinental Exchange (ICE) registered moderate gains on Tuesday, driven by a stronger Brazilian real, which discourages sugar exports from Brazil and prompted short covering by traders.

The March raw sugar contract settled at 19.45 cents per pound, up 0.12 cents or 0.6%. Meanwhile, London’s March white sugar futures also rose slightly, ending at $507.60 per metric ton, up $0.50 or 0.1%.

The sugar market appeared to stabilize after significant declines in late 2024. However, analysts remain cautious about a sustained recovery, as improved rainfall in Brazil has boosted prospects for its upcoming cane crop. Over the last three months, raw sugar prices in New York fell to a 3.5-month low, while white sugar in London hit a 2.75-year low. Last week’s gains were partly fueled by rising crude oil prices, which reached a 2.5-month high. Higher crude prices often lead sugar mills to prioritize ethanol production, tightening sugar supplies. However, this impact was tempered by a weaker Brazilian real, which incentivized exports and eased supply concerns.

India’s sugar production fell significantly in the first quarter of the 2024/25 season. From October to December, output dropped 15.5% year-on-year to 9.54 million metric tons (MMT), according to the Indian Sugar and Bio-energy Manufacturers Association (ISMA). This sharp decline has heightened expectations that India will maintain export restrictions, potentially limiting global sugar availability.

Brazil, another key producer, reported a 5.1% year-on-year drop in sugar production in its Center-South region, with output totaling 39.71 MMT by mid-December. This reduction was due to fewer operational mills. However, better weather conditions are improving the outlook for Brazil’s 2025/26 crop, which could alleviate some market pressure.

Elsewhere, Thailand’s sugar production is projected to increase by 18% year-on-year to 10.35 MMT for the 2024/25 season, while China has also recorded higher output levels. These developments are contributing to an optimistic global supply outlook. The International Sugar Organization (ISO) revised its global sugar deficit forecast for the 2024/25 season to 2.51 MMT, down from an earlier estimate of 3.58 MMT. For the 2023/24 season, the ISO raised its surplus projection to 1.31 MMT, reflecting improved supply conditions.

Technically, sugar prices remain volatile, with support levels identified at 19.27 and 19.10 cents per pound, and resistance levels at 19.65 and 19.86 cents. Market direction will likely hinge on production trends in major sugar-producing nations, ethanol demand, and macroeconomic conditions.

The global sugar market faces a complex landscape, with bearish factors such as rising output in Thailand and China countered by bullish signals like declining production in India and Brazil and strong ethanol demand. In the months ahead, traders will monitor weather patterns, policy decisions, and global economic indicators to navigate this challenging market environment.

(By Commoditiescontrol Bureau; +91 98201 30172)


       
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