March NY world sugar #11 (SBH25) today is up +0.10 (+0.45%), and December London ICE white sugar #5 (SWZ24) is up +2.30 (+0.41%).

Sugar prices today are moderately higher, supported by strength in crude oil.  WTI crude (CLX24) is up more than +3% today, which benefits ethanol prices and may prompt the world's sugar mills to divert more cane crushing toward ethanol production rather than sugar, thus curbing sugar supplies.

On Wednesday, sugar prices retreated to 3-week lows as forecasted rains in Brazil alleviated drought concerns.  Forecaster Maxar Technologies said showers will continue this week across the Center South of Brazil, the country's top sugar-producing region.  

A large net long position by funds in London white sugar may exacerbate long liquidation pressures on any price downturn.  Last Friday's weekly Commitment of Traders (COT) data showed funds increased their net-long positions in London white sugar by 4,460 in the week ending October 1 to a 4-year high of 40,192 net-long positions.

NY sugar on September 26 rallied to a 7-1/4 month high as drought conditions in Brazil reduced the country's sugar production prospects.  On September 20, Rabobank cut its 2024/25 Brazil sugar production forecast to 39.3 MMT from a previous forecast of 40.3 MMT, citing excessive dryness.  

Drought and excessive heat have caused recent fires in Brazil that damaged sugar crops in Brazil's top sugar-producing state of Sao Paulo.  Sugar cane industry group Orplana said that as many as 2,000 fire outbreaks affected up to 80,000 hectares of planted sugarcane in Sao Paulo.  Green Pool Commodity Specialists said that as much as 5 MMT of sugar cane may have been lost due to the fires.

Optimism that above-average monsoon rains in India will lead to a bumper sugar crop is bearish for sugar prices.  The Indian Meteorological Department reported last Monday that India received 934.8 mm of rain during the current monsoon season as of September 30, the most in four years and 7.6% more than the comparable long-term average of 868.6 mm.  India's monsoon season runs from June through September.

Also undercutting sugar prices is an increase in Brazil's sugar production.  Unica reported on September 27 that Center-South sugar production in the 2024/25 season through mid-September is up +3.6% y/y at 30.327 MMT.  However, Conab, Brazil's government crop forecasting agency, cut its overall 2024/25 Brazil Center South sugar production estimate on August 22 to 42 MMT from a previous forecast of 42.7 MMT, citing lower sugarcane yields due to drought and excessive heat.

In a supportive factor for sugar prices, India's Food Ministry on August 30 lifted restrictions on sugar mills producing ethanol for the 2024/25 year that starts November, which may prolong India's sugar export curbs.  Last December, India ordered sugar mills to stop using sugarcane to produce ethanol for the 2023/24 supply year to boost its sugar reserves.  India has restricted sugar exports since October 2023 to maintain adequate domestic supplies.  India allowed mills to export only 6.1 MMT of sugar during the 2022/23 season to September 30 after allowing exports of a record 11.1 MMT in the previous season.  However, last Thursday, the Indian Sugar and Bio-energy Manufacturers Association (ISM) said India will have 2 MMT of sugar to export next season and urged the government to lift its current sugar export restrictions.

The Indian Sugar and Bio-energy Manufacturers Association (ISM) reported on May 13 that India's 2023/24 sugar production from Oct-Apr fell -1.6% y/y to 31.4 MMT.  Also, the ISM on Thursday projected India's 2024/25 sugar production would fall by -2% y/y to 33.3 MMT and that India's 2023/24 sugar reserves will be at 8.4 MMT on September 30, compared with a May projection of 9.1 MMT.  

The outlook for higher sugar production in Thailand is bearish for sugar prices.  Last Tuesday, Thailand's Office of the Cane and Sugar Board projected that Thailand's 2024/25 sugar production would jump by +18% y/y to 10.35 MMT.  Thailand produced 8.77 MMT of sugar in the 2023/24 season that ended in April.  Thailand is the world's third-largest sugar producer and the second-largest sugar exporter.

In a supportive factor for sugar prices, the International Sugar Organization (ISO) on August 30 forecasted a 2024/25 global sugar deficit of -3.58 MMT, much larger than the estimated -200,000 MT deficit for 2023/24.  ISO forecasted 2024/25 global sugar production of 179.3 MMT, down -1.1% y/y from 181.3 MMT in 2023/24.  

The USDA, in its bi-annual report released on May 23, projected that global 2024/25 sugar production would climb +1.4% y/y to a record 186.024 MMT and that global 2024/25 human sugar consumption would increase +0.8% y/y to a record 178.788 MMT.  The USDA forecasted that 2024/25 global sugar ending stocks would fall -4.7% y/y to a 13-year low of 38.339 MMT.  
 

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