Sugar costs will possible come underneath stress through the present season to September because the market is predicted to witness about 4 million tonnes (mt) surplus, say analysts. They’re presently ruling close to three-month lows.
Dutch multinational and monetary companies agency Rabobank expects a tiny surplus in sugar through the 2024-25 season. It has projected a barely bullish pattern in sugar. In line with the US Division of Agriculture (USDA), international sugar output is predicted to extend by 1.5 per cent within the 2024-25 season, although demand is projected to rise by 1.2 per cent to 179.63 mt.
ING Suppose, the financial and monetary evaluation wing of one other Dutch multinational monetary companies ING, mentioned latest rains within the Heart-South area (CS) of Brazil have eased issues over the subsequent crop.
Considerations over Brazil crop
“Nonetheless, the anticipated dimension of the excess has fallen as we have now moved by means of the yr, with the worldwide market now anticipated to see a surplus of a bit of over 4 million tonnes (mt) in 2024-25,” it mentioned in its Commodity Outlook 2025.
Analysis company BMI, a unit of Fitch Options, has forecast a year-on-year decline of 1 per cent in front-month InterContinental Trade-listed sugar costs.
ING Suppose mentioned regardless of expectations for a world surplus within the sugar market within the 2024-25 season (October-September), sugar costs have held up comparatively effectively.
“This has been largely as a result of issues over the CS Brazil crop the place drought situations and fires in cane fields raised dangers not just for the 2024-25 crop but additionally the 2025/26 crop,” it mentioned.
ISO cuts deficit
Sugar costs have dropped 5 per cent year-to-date with the autumn coming primarily prior to now month (9%). At present, uncooked sugar March contracts are quoted at 19.2 cents a pound (over ₹36,400 a tonne) on InterContinental Trade (ICE), whereas London white sugar costs are ruling at $516.50 (₹44,100) a tonne.
The commodity’s charges have headed south after the Worldwide Sugar Group lower its 2024-25 international sugar deficit forecast. It additionally raised its 2023-24 international surplus estimate to 1.31 mt from its earlier projection of 200,000 tonnes.
As well as, Brazil’s crushing of sugarcane within the second half of November reached was greater at 20.35 mt – greater than expectations. Sugar provides will likely be boosted by an 18 per cent greater manufacturing in Thailand at 18 mt.
“ Whereas there are clear provide dangers which go away uncertainty over the anticipated surplus, we consider stronger Thai, EU and doubtlessly Indian manufacturing ought to cap upside in costs. We might count on the market to return underneath renewed stress as soon as the CS Brazil 2025-26 harvest will get underway,” mentioned ING Suppose.
Indian exports impression
The ING arm mentioned, “If India permits exports over the course of 2025 (which may occur within the first quarter), it is going to present additional draw back to costs. In consequence, we count on No.11 uncooked sugar (on ICE) to common USc20.30/lb over the course of 2025.”
BMI mentioned it’s projecting a drawdown in shares of soppy commodities, together with sugar, which is indicative of a extra fragile market “uncovered to poor harvests”.
ING Suppose mentioned the CS Brazil area is predicted to crush round 595 mt of sugarcane, yielding over 39 mt of sugar. The sugar combine this season has been greater than 48 per cent, with sugar costs remaining at a wholesome premium to home hydrous ethanol costs.
“That is down on final yr when nearly 655 mt of cane was crushed and greater than 42.4 mt of sugar produced,” it mentioned.
Premium to ethanol
The Dutch monetary companies agency arm mentioned with the 2024-25 CS Brazil crop largely full, consideration will flip to the 2025-26 crop, which formally begins in April.
“There’s a truthful quantity of uncertainty over how this crop will develop because of the fires seen in cane fields this yr. Giant components of CS Brazil have suffered from drought, though the area has had rain extra not too long ago as we head into the wet season,” it mentioned.
If regular climate situations proceed, this could enable agricultural yields to get better and see the trade crushing extra cane than within the 2024-25 harvest. “Moreover, sugar continues to commerce at a wholesome premium to hydrous ethanol in Brazil, so mills ought to proceed to push for a most sugar combine,” mentioned ING Suppose.
Decrease Indian output?
India’s Centrum Broking Restricted mentioned total sugar manufacturing within the 2024-25 season is predicted to be decrease at 28 mt towards 31.9 mt final season because of the elimination of the cap on the diversion of sugarcane for ethanol manufacturing.
“We keep a optimistic outlook on the sugar sector, supported by anticipated beneficial developments, similar to a rise within the minimal help value to ₹35/kg (up from ₹31/kg presently) and a 5-6 per cent rise (trade consultants vs our expectations of 3-5 per cent) in ethanol procurement costs for ESY25,” it mentioned.
