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Removing of Frost Dangers in Brazil Undercut Sugar Costs


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Sugar cane growing in Hawaii by Derrick Miller via Pixabay
Sugar cane rising in Hawaii by Derrick Miller by way of Pixabay

October NY world sugar #11 (SBV25) Monday closed down -0.10 (-0.61%), and August London ICE white sugar #5 (SWQ25) closed down -4.10 (-0.85%).

Sugar costs had been below stress Monday following the removing of the frost threat from climate forecasts in Brazil.  Additionally, an early arrival of the monsoon season in India has bolstered the outlook for a bumper sugar crop.  Rains in June had been 9% above regular in India, and the India Meteorological Division has forecast above-normal rainfall for July.

Sugar costs have plummeted over the previous three months as a result of expectations of a worldwide sugar surplus.  Final Wednesday, October NY sugar posted a contract low, and final Monday, the July NY sugar contract posted a 4.25-year low on the nearest-futures chart.  Final Wednesday, Aug London sugar posted a 3.75-year nearest-futures low.  Final Monday, commodities dealer Czarnikow projected a 7.5 MMT international sugar surplus for the 2025/26 season, the most important surplus in 8 years.  On Could 22, the USDA, in its biannual report, projected that international 2025/26 sugar manufacturing would improve by +4.7% y/y to a report 189.318 million metric tons (MMT), with international sugar ending shares at 41.188 MMT, up 7.5% year-over-year.

The outlook for larger sugar manufacturing in India, the world’s second-largest producer, is bearish for costs.  On June 2, India’s Nationwide Federation of Cooperative Sugar Factories projected that India’s 2025/26 sugar manufacturing would climb +19% y/y to 35 MMT, citing bigger planted cane acreage.  The outlook for plentiful rainfall in India may result in a bumper sugar crop, which is bearish for costs.  On April 15, India’s Ministry of Earth Sciences projected an above-normal monsoon this 12 months, with whole rainfall forecast to be 105% of the long-term common.  India’s monsoon season runs from June by September.

Indicators of bigger international sugar output are destructive for costs.  On Could 22, the USDA’s International Agricultural Service (FAS) predicted that Brazil’s 2025/26 sugar manufacturing would rise +2.3% y/y to a report 44.7 MMT.  Additionally, India’s 2025/26 sugar manufacturing is projected to rise +25% y/y to 35.3 MMT, citing favorable monsoon rains and elevated sugar acreage.  As well as, Thailand’s 2025/26 sugar manufacturing is anticipated to climb +2% y/y to 10.3 MMT.