Sugar Prices Recover on Strength in Crude Oil

July NY world sugar #11 (SBN25) right this moment is up +0.13 (+0.82%), and August London ICE white sugar #5 (SWQ25) is up +10.50 (+2.24%).

Sugar costs right this moment recovered from early losses and turned larger after a +2% rally in WTI crude oil (CLQ25) sparked some short-covering in sugar futures.  Greater crude costs profit ethanol costs and will immediate the world’s sugar mills to divert cane crushing towards ethanol manufacturing somewhat than sugar, thus curbing sugar provides.  

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Sugar costs have fallen over the previous three months, with NY sugar posting a 4-year nearest-futures low right this moment resulting from expectations of a worldwide sugar surplus.  On Might 22, the USDA, in its biannual report, projected that international 2025/26 sugar manufacturing would enhance by +4.7% year-over-year (y/y) to a report 189.318 million metric tons (MMT), with a worldwide sugar surplus of 41.188 MMT, up 7.5% year-over-year.

The outlook for larger sugar manufacturing in India, the world’s second-largest producer, is bearish for costs.  On June 2, India’s Nationwide Federation of Cooperative Sugar Factories projected that India’s 2025/26 sugar manufacturing would climb +19% y/y to 35 MMT, citing bigger planted cane acreage.  The outlook for plentiful rainfall in India may result in a bumper sugar crop, which is bearish for costs.  On April 15, India’s Ministry of Earth Sciences projected an above-normal monsoon this yr, with complete rainfall forecast to be 105% of the long-term common.  India’s monsoon season runs from June by September.  

Indicators of bigger international sugar output are destructive for costs.  On Might 22, the USDA’s International Agricultural Service (FAS) predicted that Brazil’s 2025/26 sugar manufacturing would rise +2.3% y/y to a report 44.7 MMT.  Additionally, India’s 2025/26 sugar manufacturing is projected to rise +25% y/y to 35.3 MMT, citing favorable monsoon rains and elevated sugar acreage.  As well as, Thailand’s 2025/26 sugar manufacturing is anticipated to climb +2% y/y to 10.3 MMT.

In a bearish issue, the Indian authorities mentioned on January 20 that it might enable its sugar mills to export 1 MMT of sugar this season, easing the restrictions positioned on sugar exports in 2023.  India has restricted sugar exports since October 2023 to keep up enough home provides.  India allowed mills to export solely 6.1 MMT of sugar in the course of the 2022/23 season to September 30, after permitting exports of a report 11.1 MMT within the earlier season.  Nevertheless, the ISMA tasks that India’s 2024/25 sugar manufacturing will fall -17.5% y/y to a 5-year low of 26.2 MMT.  Additionally, the ISMA reported final Monday that India’s sugar manufacturing from Oct 1-Might 15 was 25.74 MMT, down -17% from the identical interval final yr.  As well as, Indian Meals Secretary Chopra mentioned on Might 1 that India’s 2024/25 sugar exports could solely complete 800,000 MT, beneath earlier expectations of 1 MMT.

The outlook for larger sugar manufacturing in Thailand is bearish for sugar costs.  On Might 2, Thailand’s Workplace of the Cane and Sugar Board reported that Thailand’s 2024/25 sugar manufacturing rose +14% y/y to 10.00 MMT.  Thailand is the world’s third-largest sugar producer and the second-largest exporter of sugar.

A optimistic issue for sugar costs is the anticipated enhance in sugar imports from Pakistan, following the Pakistani authorities’s announcement final Friday that it plans to import 250,000 metric tons of uncooked sugar resulting from a disappointing sugarcane harvest.

Sugar costs have some assist from lowered sugar manufacturing in Brazil.  Unica reported final Monday that the cumulative 2025/26 Brazil Middle-South sugar output by Might is down by -11.6% y/y to six.954 MMT.  Final month, Conab, Brazil’s authorities crop forecasting company, mentioned 2024/25 Brazil sugar manufacturing fell -3.4% y/y to 44.118 MMT, citing decrease sugarcane yields resulting from drought and extreme warmth.  

The Worldwide Sugar Group (ISO) raised its 2024/25 international sugar deficit forecast to a 9-year excessive of -5.47 MMT on Might 15, up from a February forecast of -4.88 MMT.  This means a tightening market following the 2023/24 international sugar surplus of 1.31 MMT.  ISO additionally minimize its 2024/25 international sugar manufacturing forecast to 174.8 MMT from a February forecast of 175.5 MMT.  

The USDA, in its bi-annual report launched Might 22, projected that international 2025/26 sugar manufacturing would climb +4.7% y/y to a report 189.318 MMT and that international 2025/26 human sugar consumption would enhance +1.4% y/y to a report 177.921 MMT.  The USDA additionally forecasted that 2025/26 international sugar ending shares would climb +7.5% y/y to 41.188 MMT. 

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