Sugar prices are moderately higher today. The October raw sugar contract settled up 0.11 cent, or 0.6%, at 19.49 cents per lb.
The October white sugar contract rose 1.8% to $541.80 per tonne. According to Barchart analysis, this came after Czarnikow cut its 2024/25 Brazil Center-South sugar production estimate to 39.2 million tonnes from 40.0 million tonnes due to drought and fire damage.
In addition, Covrig Analytics today raised its 2024/25 global sugar deficit estimate to 600,000 tonnes from a previous estimate of 300,000 tonnes.
The Largest Sugar Producer in Brazil
Sugar prices rose last week to 18-month highs as drought and excessive heat caused massive fires in Brazil that damaged sugar plantations in Sao Paulo state, Brazil’s largest sugar producer.
Sugarcane industry group Orplana said about 2,000 fires had affected up to 80,000 hectares of sugarcane planted in Sao Paulo. Commodities experts Green Pool said up to 5 million tonnes of sugarcane may have been lost due to the fires.
Meanwhile, Brazil’s government crop forecasting agency Conab cut its 2024/25 Brazil Center-South sugar production estimate on Aug. 22 to 42 million tonnes from a previous forecast of 42.7 million tonnes, citing lower sugarcane yields due to drought and excessive heat.
On Friday, the International Sugar Organization (ISO) forecast a global sugar deficit for 2024/25 of 3.58 million tons, much larger than the estimated deficit of 200,000 tons for 2023/24.
World Estimate Production
The ISO forecast global sugar production in 2024/25 at 179.3 million tons, down 1.1% from 181.3 million tons in 2023/24.
Also on Friday, India’s food ministry lifted restrictions on sugar mills producing ethanol for the 2024/25 year starting in November, which could extend restrictions on India’s sugar exports.
Last December, India ordered sugar mills to stop using sugarcane to produce ethanol for the 2023/24 supply year in order to increase its sugar reserves. India has restricted sugar exports since October 2023 to maintain adequate domestic supplies.
India has allowed mills to export only 6.1 million tonnes of sugar during the 2022/23 season through September 30, after allowing exports of a record 11.1 million tonnes in the previous season.
Optimism that above-average monsoon rains in India will lead to a bumper sugar harvest is a bearish factor for sugar prices.
The Indian Meteorological Department reported on Monday that India received 777.6 mm of rain during the current monsoon season, or 8% more than the comparable long-term average of 721.1 mm. India’s monsoon season runs from June to September.