Sugar stocks surged on March 18 as sugar futures climbed to their highest level in nearly three weeks, driven by growing concerns over a potential supply shortage. Shares of leading sugar companies, including Uttam Sugar, Dhampur Sugar Mills, Rana Sugars, EID Parry India, and Balrampur Chini Mills, soared by as much as 20 percent.
Industry estimates indicated that sugar production in two of the world’s largest producers, Brazil and India, may fall short of expectations. There were also rising concerns about whether India would be able to maintain its sugar export levels in the coming months.
In global markets, the most actively traded raw sugar contract in New York jumped by 3.7 percent, reaching its highest point since February 26 before pulling back slightly.
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Additionally, the Indian Sugar and Bio-energy Manufacturers Association (ISMA) lowered its sugar production forecast for the 2024-25 season, reducing it to 26.4 million metric tonne (MMT) from its previous estimate of 27.27 MMT in January. The downward revision was attributed to lower sugarcane yields, weaker sugar recovery in Uttar Pradesh, and a decline in production levels in Maharashtra.
Meanwhile, the International Sugar Organization (ISO) raised its forecast for the global sugar deficit in the 2024/25 season, increasing it to -4.88 MMT from its earlier estimate of -2.51 MMT in November. This highlights a tightening supply situation, in contrast to the global sugar surplus of 1.31 MMT recorded in the 2023/24 season.
Weather conditions in Brazil have also contributed to the supply concerns. Prolonged dry weather in the world’s largest sugar producer has led some producers and traders to revise their sugarcane harvest estimates downward. Conab, Brazil’s government crop forecasting agency, cut its sugar production estimate for the 2024/25 season to 44 MMT, down from its earlier projection of 46 MMT, citing lower sugarcane yields due to drought and excessive heat.
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