The global sugar market is likely to face downward pressure on prices in the coming months, driven by a projected surplus in production during the 2024-2025 marketing season (October 2024 to September 2025). According to recent reports, global sugar production is expected to exceed consumption by around 4 million tonnes, which could weigh on market prices.
As per a report from Dutch multinational bank Rabobank, surplus stocks are anticipated to persist throughout the season, which could further dampen prices.
Additionally, the US Department of Agriculture has forecasted a 1.5% increase in global sugar production for 2024-2025 compared to the previous year, while consumption is expected to grow at a more moderate rate of 1.2%.
In Brazil, which is the world’s largest producer and exporter of sugar, the outlook for production has been mixed. While earlier predictions suggested a substantial increase in output for 2024, the situation has changed due to adverse weather conditions, including heat, drought, and incidents of arson that have impacted the sugarcane crop.
However, recent good rains in the central-southern region of Brazil have alleviated concerns to some extent, providing a more favorable outlook for the coming season.
Other regions are also seeing a mix of conditions that could influence global sugar production. The sugar beet crop in the European Union and the sugarcane crop in Thailand are in good shape, potentially boosting production in those regions. However, India, a major sugar producer, is expected to see a decline in its sugar output this year, which could limit global supply.
At present, sugar prices are at their lowest levels in three months. Compared to last year, sugar prices have dropped by 5%, with a sharp 9% decline observed last month.
As of now, the futures price of raw sugar on the New York Exchange stands at 19.2 cents per pound (around ₹36,400 per tonne), while white sugar on the London Exchange is priced at $516.50 (around ₹44,100 per tonne).
In conclusion, despite some positive developments in key production regions, the global sugar market is likely to experience downward price pressure due to the anticipated production surplus in the 2024-2025 season. This could lead to lower prices, at least in the short term.