Sugar prices have slipped to a six-week low in international markets, reaching a low of 24.7 cents per pound. This decline follows a significant surge in April when prices had reached an 11-year high of 27 cents. One of the key factors contributing to the downward trend in prices is the strong supply from Brazil.
The country's harvest is up by an impressive 48% compared to the previous year. In addition to that, the percentage of cane crushed for sugar has increased by 45.6% year-on-year, leading to an estimated 4.7% YoY increase in Brazil's sugar output for 2023-24.
The International Sugar Organization has now revised its global estimates lower for the 2023-24 period, with projected production at 177.4 million tonnes. It also cut the surplus estimate to 852,000 tonnes, significantly lower than the earlier estimate of 4.15 million tonnes.
The U.S. Department of Agriculture (USDA) meanwhile remains bullish on sugar, and has forecast a 6% increase in global production to 187.88 million tons for 2023-24. Consumption is expected to rise by 2.3% to 180.045 million tons, resulting in ending stocks at a five-year low of 33.45 million tons.
Weather concerns too end up adding to the uncertainties surrounding sugar prices. The possibility of El Nino causing floods in Brazil and drought in India raises questions about future supply and its impact on prices.
In India, the uncertainty surrounding the monsoon season may help support sugar prices. Overall, the combination of supply dynamics, global estimates, and weather uncertainties suggests a mixed outlook for sugar prices in the international markets.
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