Stocks

Headlines

Sugar Prices Retreat Amid Increased Production Outlook

Sugar prices are facing a downward trend as the forecast for higher production, particularly from Brazil and India, weighs heavily on the market. Analysts predict ongoing price pressure due to abundant global supply.

Date: 
AI Rating:   3
Sugar Market Under Pressure
The recent report outlines a concerning trend for sugar prices, which have hit a 2-1/2 year low in New York and a 2-week low in London, primarily due to increasing production forecasts. Brazil's sugar output is projected to rise significantly, with a reported increase of 1.3% year-over-year for the first half of April, reaching 731,000 MT. Additionally, Conab's projection of a 4% year-over-year increase in Brazil's production to 45.875 MMT for the 2025/26 season suggests a supply glut that could further depress prices.

Implications of India’s Weather Forecast
Moreover, the Indian Ministry of Earth Sciences' forecast of an above-normal monsoon, potentially leading to a bumper crop, exacerbates the negative outlook for sugar prices. If India’s production meets these expectations, it could provide further downward pressure on global prices, which are already burdened by larger outputs elsewhere.

Weak Demand Indicators
Adding to this bearish sentiment is the sign of weak demand as indicated by Green Pool Commodity Specialists, noting a sizable number of contracts in NY May sugar that indicate deliveries. This points to concerns about consumption overshadowing the production increase, further spurring price declines.

Production Forecasts and Global Supply Dynamics
Global forecasts are also trending negatively. The USDA's projections for Brazil's production in 2025/26 align with themes of increased output across major sugar producers. Green Pool projects a global sugar market surplus of +2.7 MMT next year, a stark reversal from the previous deficit. Furthermore, the expected increase of 1.5% year-over-year in global sugar production only adds to the bearish landscape for prices.

Pressure from Thailand and India
Improving production forecasts from Thailand, along with reports from the ISMA indicating India’s production could hit a 5-year low due to severe weather impact, suggest a complex picture where increased production in one region might not be offset by declines elsewhere.

Overall, the combination of rising production forecasts, weak demand signals, and unfavorable global supply indicators suggests that sugar prices may continue this downward trend in the near term.
Stocks: