- Sugar production in Brazil will be lower than expected. Production in India and Thailand is also falling. The reasons include weather conditions.
- Global estimates of the sugar surplus on the market have been cut by up to half.
- Last season’s record sugar production in Brazil gave high sugar stocks and allowed for uninterrupted exports in the first half of 2024.
- The sugar production situation affects sugar prices on the global market.
Sugar market surplus smaller than expected
An oversupply in the sugar market was forecast for September and October 2024. Now brokers are revising their estimates lower – from 2.5 million tonnes to as low as 1.2 million tonnes. Despite an increase in sugar production in Asia, including production above estimates in China, a significant reduction was found in Brazil. This is due to the lower quality of this year’s sugarcane crop and a smaller than expected allocation of cane for sugar production and more for ethanol production.
The original estimate of record production was based on the adjustment of plants to sugar production and an increase of more than 4% in the area under sugar cane in Brazil. Depending on the sources, it is estimated that Brazil will produce 40.5-41.3 million tonnes of sugar this year, 0.3-2 million tonnes less than expected in the spring. Sugar production will be allocated 50.3-50.5% of sugar cane, rather than 51.2-52% as previously estimated.
Brazilian sugar production and the global market situation
Last year, the global sugar surplus amounted to 4.6 million tonnes, almost four times more than this year’s forecasts. Brazilian sugar production contributed significantly to this high surplus, which last season increased by 25.7% over the previous year. This year, despite lower sugar production than expected, a rapid harvest due to dry weather and large sugar stocks resulted in record Brazilian sugar exports in the first half of the year, which amounted to 15.15 million tonnes, accounting for 50% of production.
Sugar prices have fallen sharply over the past month due to high estimates of a global sugar surplus and prospects for improving yields in India and Thailand, among others. In recent days, however, a rise in prices has been seen after it was announced that sugar production in some areas of Brazil had fallen significantly. In addition, India announced surplus sugar production and stocks. Sugar prices are also supported by below-normal monsoon rainfall in India and record heat in Thailand, which could damage the sugar cane crop. To support sugar prices, the International Sugar Organisation (ISO) has raised its estimate of the global deficit and global demand for the product.
