ICE May Raw Sugar Deliveries: Navigating Volatility in a Tight Market

The global raw sugar market faces a pivotal moment as traders estimate May 2025 deliveries under the ICE Sugar No. 11 futures contract could reach 1.48 million metric tons—a figure that underscores both opportunities and risks for investors. This projection, nestled within a landscape of shifting supply dynamics, geopolitical pressures, and speculative activity, demands a nuanced analysis of the factors driving the market.

Supply-Side Realities: Brazil’s Harvest and India’s Crossroads

The backbone of global sugar supply hinges on Brazil’s sugarcane harvest, which accounts for nearly half of global output. Late 2024/25 harvest data revealed 27.2 million tonnes crushed in October 2024, a 10.3% increase from expectations but 21.6% lower year-over-year. Prolonged rainfall threatens to halt milling operations early, limiting final production. If Brazil’s mills extend processing into December, an additional 300,000–50.000,000 tons could enter the market—a wildcard that could ease the projected global trade deficit.

Meanwhile, India’s 2024/25 crop, buoyed by a 7% increase in monsoon rains, is poised to deliver a record 35.5 million metric tons—a +12% jump from 2023/24. However, political decisions will dictate its impact: post-election policies could either open the floodgates for exports or prioritize domestic stockpiles. A 700,000-ton export cut in late 2024 already tightened supply, and renewed restrictions could push prices higher.

Demand and Speculation: Balancing Act for Prices

Global demand remains robust, driven by Asia-Pacific’s growing processed-food sector. Yet speculative trading adds volatility. By November 2024, speculators reduced net long positions by 10,000 contracts, with shorts rising to 75,593—a shift that dampened upward price momentum.

Prices surged to 20.89 cents/lb in late December 2024 amid Brazil’s harvest uncertainty and India’s export cuts, but retreated to 19.31 cents/lb as improved supply forecasts emerged. The May 2025 delivery estimate of 1.48 million tons sits in this volatile context, balancing speculative short-covering against fears of a supply shortfall.

Key Risks: Weather, Policy, and Speculation

1. Weather: Brazil’s rainfall patterns and India’s monsoons remain critical. A prolonged El Niño could disrupt both.
2. Policy: India’s ethanol mandates and export quotas, along with U.S. tariff-rate quotas, could alter market flows.
3. Speculation: If shorts continue to dominate, prices may face further downward pressure despite tight fundamentals.

The May 2025 Delivery in Context

Historical May deliveries offer perspective:
- 2020: 2,000 contracts (~101,600 tons)
- 2021: 3,500 contracts (~177,800 tons)
- 2022: 6,000 contracts (~309,600 tons)
- 2023: 5,800 contracts (~294,800 tons)
- 2024 (Proj.): 6,500 contracts (~330,200 tons)

The 1.48 million ton estimate for May 2025 exceeds even Brazil’s entire 2023/24 sugar production surplus, suggesting traders anticipate a robust delivery cycle. However, this hinges on Brazil’s mills extending operations and India’s exports materializing.

Conclusion: A Delicate Balance

The May 2025 delivery estimate of 1.48 million tons reflects a market caught between optimism and caution. On one hand, Brazil’s potential late-season output and India’s record harvest could ease supply constraints, pushing prices toward 16.44 cents/lb by 2025. On the other, geopolitical risks, weather disruptions, and speculative short positions could amplify volatility.

Investors should prioritize:
- Long positions if Brazil’s harvest extends or India opens export taps.
- Short positions if demand weakens further in China or speculative shorts dominate.
- Risk mitigation via options to hedge against extreme weather events or policy shocks.

The ICE Sugar No. 11 market remains a high-reward, high-risk arena—where every ton of sugar and every policy shift carries disproportionate weight. For now, the 1.48 million ton estimate is both a target and a warning: the path to profit will be navigated through data, agility, and an unwavering eye on the horizon.