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Global Sugar Market Balances Ample Supply Prospects with Production Declines

10 Jan 2025 9:12 am
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MUMBAI, 10 Jan (Commoditiescontrol): Raw sugar prices on the Intercontinental Exchange (ICE) fell on Thursday, driven by expectations of ample global supply. The March raw sugar contract declined by 0.7% to settle at 19.10 cents per pound, following a brief dip to a 3.5-month low of 18.84 cents. Similarly, London’s March white sugar futures dropped by $2.10, or 0.4%, to close at $501.60 per metric ton.

Market analysts highlighted growing production in key sugar-producing regions. China’s increased output is expected to reduce its reliance on imports, while recent rainfall has bolstered prospects for sugar production in Brazil’s Centre-South (CS) region for the upcoming 2025/26 season.

Rabobank noted improved estimates for Brazil’s sugar output, with broker Hedgepoint Global Markets projecting that CS Brazil could process 620 million tons of sugarcane in the 2024/25 crop year, aided by better-than-expected crushing results.

Conversely, India’s sugar production dropped sharply by 15.5% year-on-year to 9.54 million metric tons (MMT) between October and December 2024, according to the Indian Sugar and Bio-energy Manufacturers Association (ISMA). The decline has fueled expectations that India will maintain export restrictions, potentially limiting global sugar availability.

Brazil’s CS region also recorded a 5.1% year-on-year decline in sugar output by mid-December, totaling 39.71 MMT, due to fewer operational mills. However, favorable weather conditions are anticipated to boost the region’s 2025/26 harvest, easing some supply concerns.

Thailand’s sugar production is expected to increase by 18% year-on-year to 10.35 MMT for the 2024/25 season, while China has also reported higher output. Reflecting these trends, the International Sugar Organization (ISO) revised its global sugar deficit forecast for the 2024/25 season to 2.51 MMT, down from a previous estimate of 3.58 MMT. For the 2023/24 season, the ISO raised its surplus projection to 1.31 MMT, citing improved supply conditions.

Technical analysis suggests raw sugar prices could find support at 18.87 and 18.64 cents per pound, with resistance levels at 19.30 and 19.50 cents.

The global sugar market is navigating a mix of bearish and bullish factors. Increased production in Thailand and China is counterbalanced by declining output in India and Brazil, alongside strong ethanol demand. Traders are expected to closely monitor weather conditions, government policies, and macroeconomic trends to gauge future price movements.

While short-term volatility persists, the interplay between supply dynamics and demand trends will likely shape the global sugar market’s direction in the coming months.

(By Commoditiescontrol Bureau; +91 98201 30172)


       
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