Analysis Commodities
Global Sugar Surplus Revised Downward
The trend on the sugarmarket is still downward. The latest production figures from Brazil are slightly lower, but the total production this season remains significantly higher than last year. Indian rainfall is positively impacting the market, putting pressure on prices. On the other hand, market agency Czarnikow is revising its expectations for global production slightly downward.
Sugar prices continue to be under pressure due to favorable news about sugarcane cultivation in major producing countries. The American quotation closed monday at $397.27 per ton, and London at $513.70 per ton. Sugar prices have been showing a downward trend for months, although the declines have been relatively limited recently.
In Brazil, one of the world's largest sugar producers, production figures in the second half of July were slightly lower than the same period last year, according to the Brazilian sugar association Unica. With 3.6 million tons, production in the key production regions in the second half of July was 2.2% lower than last year. So far, Brazil has been performing very well since the beginning of the season, with production in the respective region 8% higher than the previous season. Brazil has produced 20.75 million tons of sugar so far. The successful production is influencing the market, reflecting the negative sentiment.
In the second half of July, Brazil processed 51.32 million tons of sugarcane in the key production region, which is 3.4% lower than last year in the same period. However, since the beginning of the season, that level is 6.7% higher, totaling 332.8 million tons of sugarcane.
Rainfall in India
The sentiment regarding production expectations in India, the world's second-largest sugar producer, is also improving. Analysts are discussing the rainfall during the current monsoon season. The Indian Meteorological Department reported above-average rainfall figures, which is good news for sugarcane cultivation. Since the beginning of August, rainfall has been higher than normal. For example, on monday there was an average of 3% more rainfall across the country than usual. This could benefit the supply.
Revised Expectations
Earlier, we mentioned the British market agency Czarnikow, which provides expectations for global production several times a year. Each time, the forecast for higher global production was revised upwards, partly due to expectations of favorable rainfall in Asia. However, the agency is now changing its stance. The world production is estimated at 186 million tons for 2024/25. This represents a downward revision of 3.7 million tons from its previous forecast.
Currently, Czarnikow expects a global sugar surplus of 5.9 million tons. Relatively dry weather in Brazil has impacted production more than Czarnikow previously anticipated. Additionally, Russian beet production is expected to be lower due to extreme temperatures. However, a potential increase in Indian production supports the expectation of a sugar surplus.
Alex Jurvillier
© DCA Market Intelligence. Op deze marktinformatie berust auteursrecht. Het is niet toegestaan de inhoud te vermenigvuldigen, distribueren, verspreiden of tegen vergoeding beschikbaar te stellen aan derden, in welke vorm dan ook, zonder de uitdrukkelijke, schriftelijke, toestemming van DCA Market Intelligence.
