Surplus sugar forecasts send global prices to five-week low

A surplus yield might open an opportunity for the Centre to consider allowing some exports, say sugar experts. India is the world's second-largest producer of sugar.

Global sugar prices have hit a five-week low, falling for a fourth day in the New York futures market, as projections of a surplus crop for 2024-25 season in Thailand, European Union and India by various industry bodies and analysts weighed on sentiment.

India's top sugar body ISMA too has projected a substantial sugar reserve of 9.1 million tonne for the season in its latest forecast. A surplus yield might open an opportunity for the Centre to consider allowing some exports, say sugar experts.

India is the world's second-largest producer of sugar.

In October last year, the Union Government had extended the restrictions on the export of sugar (raw sugar, white, refined and organic sugar) beyond 31 October, 2023 until further review.

The Economic Survey released on July 22 states that these export restrictions have helped stabilise domestic sugar prices, which haven't inflated despite volatility in global prices, seen since last year. "Even though the global sugar price index inflated and has been showing volatility since February 2023, domestic sugar prices have remained much less volatile," the Survey added.

Estimates also show a surplus sugar output in Thailand due a healthy spell of rainfall, which is expected to help the crop. Forecasts of higher-than-expected yield are helping offset fears of lower output in Brazil due to recent weather disruptions.

Unica, the Brazilian sugarcane industry association, has announced a 15.7 percent on-year increase in sugar output for June. Brazil's National Supply Company (Conab) raised the bar further, with estimates projecting a record-breaking 46.29 million tonne of sugar production, up from 42.42 million tonne a year ago.

Top industry analysts at Czarnikow and Covrig Analytics too weighed in with their projections, with Czarnikow forecasting a global sugar production of 189.7 million tonne for the 2024-25 season, edging out US Department of Agriculture's (USDA) estimate of 186.04 million tonne. Consumption figures, though robust, lagged behind production, with Czarnikow predicting 180.8 million tonne and USDA at 178.8 million tonne.