Sugar Prices Slip Amid Dollar Strength, Brazilian Production to Rise

Sugar prices closed lower on Monday due to a stronger dollar and pressure from Brazil's sugar mills increasing production. However, signs of stronger global sugar demand, such as China's July sugar imports surging +76%, and Pakistan's tender for 200,000 MT of refined sugar, provide some support. The outlook for higher sugar production in India, the world's second-largest producer, is bearish for prices.

Sugar prices closed lower on Monday, influenced by a stronger dollar and increased production from Brazil's sugar mills. However, signs of stronger global sugar demand, such as China's July sugar imports surging +76% and Pakistan's tender for 200,000 MT of refined sugar, provided some support. The outlook for higher sugar production in India, the world's second-largest producer, is bearish for prices.

Brazil's sugar mills are prioritizing sugar production over ethanol, crushing more cane for sugar, driven by drier cane crops. This trend is expected to continue as harvesting peaks. According to Covrig Analytics, Brazil's sugar mills are crushing more cane for sugar, which has put pressure on sugar prices [1].

On the other hand, global sugar demand has shown signs of strength. China's July sugar imports surged +76% to 740,000 MT, and Pakistan recently tendered for 200,000 MT of refined sugar. These factors provide some support for sugar prices [1].

The outlook for higher sugar production in India is bearish for prices. India's Meteorological Department reported that cumulative monsoon rain in India was 611.2 mm as of August 18, or 1% above normal, which is expected to lead to a bumper sugar crop. The Indian Sugar and Bio-energy Manufacturers Association recently said that it will seek permission to export 2 MMT of sugar in 2025/26. This increased production is expected to impact global sugar prices negatively [1].

The USDA projected that global 2025/26 sugar production would increase by +4.7% y/y to a record 189.318 MMT, with global sugar ending stocks at 41.188 MMT, up 7.5% y/y. However, the outlook for higher sugar production in India, the world's second-largest producer, is bearish for prices [1].

In conclusion, while global sugar demand is strong, the outlook for higher sugar production in Brazil and India is expected to impact sugar prices. Investors should keep an eye on these developments as they may influence future price movements.

References:
[1] https://www.nasdaq.com/articles/sugar-prices-slightly-lower-prospects-higher-brazil-output
[2] https://economictimes.indiatimes.com/news/economy/agriculture/food-secretary-sees-bright-sugarcane-prospects-urges-sugar-industry-consensus-on-export-quotas/articleshow/123519895.cms