The sugar market has held within a 1.03 cent trading range for nearly four weeks, and during that time it failed three attempts to break out, most recently Tuesday’s upside breakout to a 4-week high. The July contract has seen 13 of the 19 trading sessions with daily low between 19.31 and 18.97 cents, which provides a “floor” to the consolidation zone.
This has also been a period when the sugar market has received some bearish supply news. La Niña is expected to arrive this summer, which could bring badly needed rainfall to Thailand and an above-average monsoon rainfall in India.
Brazil Center-South mills ramped up their crushing operations in March, which led to a strong start to the marketing year. In its first report for the 2024/25 season, Unica reported Brazil Center-South sugar production for the first half of April 710,000 tonnes, up 31% from last year.
A key factor in the strong start was sugar’s share of crushing, which at 43.6% was well above the 38.0% share it received during the same period last year. There was a notable shift in Center-South domestic ethanol sales during the first half of April, as they were 31% below last year, which put them sales on track for their first year-over-year decline since July. The Brazilian currency reached a 13-month low in mid-April, which also encouraged producing sugar for export.
The first-half April Center-South cane-crush of 15.81 million tonnes was 14% above last year and may become a critical factor for sugar prices going forward. Despite the fast start, the dry conditions Brazil has experienced since late 2023 could lower yield as the season progresses. Recent trade forecasts have projected the 2024/25 cane crush to come in below 600 million tonnes versus 654 million last year.
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Originally Published May 10, 2024
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