Expectations For a Global Sugar Surplus Continue to Weigh on Prices
Sugar prices today gave up an early advance and fell sharply, with London sugar posting a 1-week low. Sugar prices have plummeted over the past three months due to expectations of a global sugar surplus. On July 2, October NY sugar posted a contract low, and Aug London sugar posted a 3.75-year nearest-futures low, while on June 30 the July NY sugar contract posted a 4.25-year low on the nearest-futures chart. On June 30, commodities trader Czarnikow projected a 7.5 MMT global sugar surplus for the 2025/26 season, the largest surplus in 8 years. On May 22, the USDA, in its biannual report, projected that global 2025/26 sugar production would increase by +4.7% y/y to a record 189.318 million metric tons (MMT), with global sugar ending stocks at 41.188 MMT, up 7.5% year-over-year.
Coffee Prices Surge on Dry Conditions in Brazil and Tariff Threats
Why Sunday's Open Isn't as Important as the Next Weekly Close
Slower Pace of Ivory Coast Cocoa Exports Boosts Cocoa Prices
Stop Missing Market Moves: Get the FREE Barchart Brief – your midday dose of stock movers, trending sectors, and actionable trade ideas, delivered right to your inbox. Sign Up Now!
On Monday, NY sugar initially climbed to a 2-week high, and last Wednesday, London sugar posted a 1.5-month high on concerns that global sugar supplies may tighten. Pakistan said last week it will import 500,000 MT of sugar, and the Philippines said it will import 424,000 MT of sugar.
The outlook for higher sugar production in India, the world's second-largest producer, is bearish for prices. On June 2, India's National Federation of Cooperative Sugar Factories projected that India's 2025/26 sugar production would climb +19% y/y to 35 MMT, citing larger planted cane acreage. The outlook for abundant rainfall in India could lead to a bumper sugar crop, which is bearish for prices. On April 15, India's Ministry of Earth Sciences projected an above-normal monsoon this year, with total rainfall forecast to be 105% of the long-term average. India's monsoon season runs from June through September. On Monday, the India Meteorological Department reported that rainfall in June was 9% above normal in India and has forecast above-normal rain for July.
Signs of larger global sugar output are negative for prices. On May 22, the USDA's Foreign Agricultural Service (FAS) predicted that Brazil's 2025/26 sugar production would rise +2.3% y/y to a record 44.7 MMT. Also, India's 2025/26 sugar production is projected to rise +25% y/y to 35.3 MMT, citing favorable monsoon rains and increased sugar acreage. In addition, Thailand's 2025/26 sugar production is expected to climb +2% y/y to 10.3 MMT.
In a bearish factor, the Indian government said on January 20 that it would allow its sugar mills to export 1 MMT of sugar this season, easing the restrictions placed on sugar exports in 2023. India has restricted sugar exports since October 2023 to maintain adequate domestic supplies. India allowed mills to export only 6.1 MMT of sugar during the 2022/23 season to September 30, after allowing exports of a record 11.1 MMT in the previous season. However, the ISMA projects that India's 2024/25 sugar production will fall by -17.5% y/y to a 5-year low of 26.2 MMT. Also, the ISMA reported last Monday that India's sugar production from Oct 1-May 15 was 25.74 MMT, down -17% from the same period last year. In addition, Indian Food Secretary Chopra said on May 1 that India's 2024/25 sugar exports may only total 800,000 MT, below earlier expectations of 1 MMT.
The outlook for higher sugar production in Thailand is bearish for sugar prices. On May 2, Thailand's Office of the Cane and Sugar Board reported that Thailand's 2024/25 sugar production rose +14% y/y to 10.00 MMT. Thailand is the world's third-largest sugar producer and the second-largest exporter of sugar.
Sugar prices have some support from reduced sugar production in Brazil. Unica reported today that the cumulative 2025/26 Brazil Center-South sugar output through June is down by -14.3% y/y to 12.249 MMT. Last month, Conab, Brazil's government crop forecasting agency, said 2024/25 Brazil sugar production fell by -3.4% y/y to 44.118 MMT, citing lower sugarcane yields due to drought and excessive heat.
The International Sugar Organization (ISO) raised its 2024/25 global sugar deficit forecast to a 9-year high of -5.47 MMT on May 15, up from a February forecast of -4.88 MMT. This indicates a tightening market following the 2023/24 global sugar surplus of 1.31 MMT. ISO also cut its 2024/25 global sugar production forecast to 174.8 MMT from a February forecast of 175.5 MMT.
The USDA, in its bi-annual report released May 22, projected that global 2025/26 sugar production would climb +4.7% y/y to a record 189.318 MMT and that global 2025/26 human sugar consumption would increase +1.4% y/y to a record 177.921 MMT. The USDA also forecasted that 2025/26 global sugar ending stocks would climb +7.5% y/y to 41.188 MMT.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Fast Company
18 minutes ago
- Fast Company
Wall Street's winning streak continues in another record-setting week
U.S. stocks are hanging around their records on Friday and coasting toward the close of another winning week. The S&P 500 was edging up by 0.1% in early trading, coming off its latest all-time high, and is on track to finish its fourth winning week in the last five. The Dow Jones Industrial Average was up 71 points, or 0.2%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was drifting around its record set the day before. Deckers, the company behind Ugg boots and Hoka shoes, jumped 16.6% after reporting stronger profit and revenue for the spring than analysts expected. Its growth was particularly strong outside the United States, where revenue soared nearly 50%. Edwards Lifesciences rose 8% after likewise topping Wall Street's expectations for profit in the latest quarter. It said it saw strength across all its product groups, and it expects profit for the full year to come in at the high end of the forecasted range it had given earlier. They helped offset drop of 8.8% for Intel, which fell after reporting a loss for the latest quarter, when analysts were looking for a profit. The struggling chipmaker also said it would cut thousands of jobs and eliminate other expenses as it tries to turn around its fortunes. Intel, which helped launch Silicon Valley as the U.S. technology hub, has fallen behind rivals like Nvidia and Advanced Micro Devices while demand for artificial intelligence chips soars. The pressure is on companies to deliver solid growth in profits after their stock prices rallied to record after record in recent weeks. Wall Street has zoomed higher on hopes that President Donald Trump will reach trade deals with other countries that will lower his stiff proposed tariffs, along with the risk that they could cause a recession and drive up inflation. Trump has recently announced deals with Japan and the Philippines, and the next big deadline is looming on Friday, Aug. 1. Besides potential trade talks, next week will also feature a meeting by the Federal Reserve on interest rates. Trump again on Thursday lobbied the Fed to cut rates, which he has implied could save the U.S. government money on its debt repayments. Fed Chair Jerome Powell, though, has continued to insist he wants to wait for more data about how Trump's tariffs will affect the economy and inflation before the Fed makes its next move. Lower interest rates can help goose the economy, but they can also give inflation more fuel. Lower rates also may not lower the U.S. government's costs to borrow money, if the bond market feels they could send inflation higher in the future. In that case, lower short-term rates brought by the Fed could actually have the opposite effect and raise the interest rates that Washington must pay to borrow money over the long term. The widespread expectation on Wall Street is that the Fed will wait until September to resume cutting interest rates. In the bond market, Treasury yields held relatively steady following Trump's latest attempt to push Powell to cut interest rates. Trump also seemed to back off on threats to fire the Fed's chair. 'To do that is a big move, and I don't think that's necessary,' Trump said. 'I just want to see one thing happen, very simple: Interest rates come down.' If Trump fired Powell, he'd risk freaking out financial markets by raising the possibility of a less independent Fed, one unable to make the unpopular choices that are necessary to keep the economy healthy. The yield on the 10-year Treasury edged down to 4.42% from 4.43% late Thursday. The two-year Treasury yield, which more closely tracks expectations for what the Fed will do, held steady at 3.91%. In stock markets abroad, indexes slipped across much of Europe and Asia. Stocks fell 1.1% in Hong Kong and 0.3% in Shanghai. U.S. Treasury Secretary Scott Bessent has said he will meet with Chinese officials in Sweden next week to work toward a trade deal with Beijing ahead of an Aug. 12 deadline. Trump has said a China trip 'is not too distant' as trade tensions ease.
Bloomberg
19 minutes ago
- Bloomberg
Wise Turned to US as Some Investors Pushed Back on Dual Shares
Wise Plc's plan to shift its primary listing out of London gathered momentum after some existing shareholders rebuffed a proposal that would have allowed Chief Executive Officer Kristo Käärmann to keep his so-called golden shares for many more years, according to people familiar with the matter. In late 2024, Wise's board began consulting with shareholders on a plan that would allow the company to preserve in London the dual-class share structure that gives Käärmann de facto voting control in the company, the people said, asking not to be identified discussing non-public information.
Bloomberg
19 minutes ago
- Bloomberg
Centerbridge Partners Seeks Ways to Break to Price Deadlocks
Hi, it's Swetha Gopinath in London, speaking with the co-founder of alternative investment firm Centerbridge Partners. Also today, a $200 billion railroad takes shape after decades of M&A dreams. Today's top stories
