By Maytaal Angel
LONDON (Reuters) – Raw sugar prices are expected to post an annual gain of nearly 20% in 2024 as the global market shifts into a deficit in the upcoming season, a Reuters poll of 12 traders and analysts showed.
Sugar is set to close the year at 24.5 cents per lb, up 5% versus the close on Tuesday and as much as 19% above levels at the end of last year, according to the poll’s median forecast.
Output in Centre-South Brazil, the leading production region, is expected to remain strong despite a modest drop in the cane crop with mills favouring production of the sweetener over biofuel ethanol.
A drop in production is, however, expected in number two producer India.
“The sugar market remains stressed. Relying on a single source of supply is unhealthy, and Centre-South Brazil cannot save the market alone. Without growth in India, global sugar production in 2024/25 is likely to fall,” trader and supply chain services company Czarnikow said.
The poll’s median estimate was for a global sugar surplus of 500,000 metric tons for the current 2023/24 season (October to September), which will flip into a deficit of 700,000 tons in 2024/25.
Top producer Brazil’s Centre-South sugar output was expected at 42.1 million tons in the upcoming 2024/25 (April to March) season, according to median estimates, versus an estimated 42.1 million tons so far this season, according to the International Sugar Organization (ISO).
The possible small increase in Brazilian output next season is despite a Centre-South cane crop that poll participants forecast at 620 million tons in the upcoming 2024/25 versus an estimated 645 million tons this season, according to the ISO.
Brazilian mills are diverting more cane to sugar production in place of the cane-based biofuel ethanol, with Reuters’ poll participants forecasting a production mix of 51.5% next season in favour of the sweetener.
“The 24/25 Brazil crop seems very unlikely to fulfil the high figures that were around late Dec/early Jan. Global stocks remain tight whereas a substantial surplus would be needed to replenish them – which now seems very unlikely,” said analysts Green Pool.
White sugar prices were forecast to end the year at $700 per metric ton, up 6% from Tuesday’s close and as much as 17% above levels seen at the end of 2023.
No. 2 sugar grower India was forecast to produce 31.6 million tons of sugar in the current 2023/24 (October-September) season, moving down to 29 million in the upcoming 2024/25 season.
(Reporting by Maytaal Angel; editing by Barbara Lewis)
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