iGrain India - The sugar market is currently facing uncertainties due to various factors, but expectations of better production in Thailand, the European Union, and potentially India could help stabilize prices. While sugar production in Brazil, particularly in the central-southern region, has been impacted by severe droughts and fires in sugarcane fields during 2024, analysts are hopeful that production in other regions will compensate for this shortfall.
Key Points:
- Brazil's Sugar Production Impacted: Severe weather conditions, including droughts and fires in Brazil, have led to a decrease in sugar production. The expected crushing of about 59.5 million tonnes of sugarcane in the 2024-25 season is down from previous expectations, with sugar production estimated between 39-39.5 million tonnes. This slowdown in crushing is expected to limit Brazil’s sugar exports and may lead to reduced surplus stocks globally.
- Thailand's Production Surge: Thailand, one of the world’s major sugar producers, is expected to see an 18% increase in sugar production during the 2024-25 season, compared to the previous year. This boost in production will help offset the shortfall from Brazil, providing relief to the global market.
- European Union's Contribution: The European Union is also expected to see better sugar production, which could help further mitigate the effects of Brazil’s struggles. This, combined with Thailand’s increase in output, is expected to dampen the potential rise in global sugar prices.
- India's Potential Role: Though India’s sugar exports are generally low, analysts suggest that if the government permits sugar shipments, it could add pressure to global prices by increasing supply. However, this remains uncertain as India typically restricts exports to ensure domestic supply stability.
- Global Sugar Prices: With the ongoing challenges in Brazil and the increased production in other regions, global sugar prices are expected to remain volatile. The average futures price of raw sugar on the New York Exchange during 2025 is projected to hover around 20.30 cents per pound.