Global Sugar Glut Builds as Brazil, India, and Thailand Ramp Up
Marcelo Bonifacio, Market Intelligence Analyst at StoneX Brazil, analyzes the key drivers behind the latest decline in global sugar prices and why the historical link to oil prices is weakening.
Key Takeaways
Brazil, India, and Thailand are all boosting sugar production for the upcoming crop year
Weak global demand is compounding the price pressure despite strong supply
Brazil’s revised gasoline pricing policy is reducing sugar’s correlation with oil
Sugar Production Surges Across Major Exporters
Brazil is leading the global supply surge, with new data confirming strong sugarcane yields and production forecasts. Thailand is also enjoying “really good climate” with increased sugarcane planting and favorable rainfall throughout May and June. India, rebounding from a weak crop year, now expects a production increase of around 6 million tons, with a potential export surplus of 3 million tons.
Weak Demand Amplifies the Price Slide
Even as global supply climbs, demand is not keeping pace. Bonifacio highlighted that the market is experiencing “a lot of supply” while “the demand side is not coming with the strong force that we are expecting”. This imbalance has pushed sugar prices to near four-year lows and is dampening outlooks for the next international crop season.
Decoupling of Sugar and Oil Prices in Brazil
Historically, sugar prices have been linked to crude oil due to ethanol production economics. However, Bonifacio explained that this relationship has weakened since 2023 when Brazil’s state oil company Petrobras moved away from adjusting gasoline prices in line with international oil markets. “They are not following the international prices,” he said, pointing out how recent price cuts have disrupted the usual sugar-energy link.
Geopolitical Uncertainty Adds Complexity
The weakening oil-sugar correlation comes at a time of geopolitical instability. While oil prices rise amid global conflicts, Petrobras has limited its price adjustments, adding complexity to Brazil’s energy policy and its ripple effects on sugar markets. “Petrobras can or cannot make a move following all these problems and conflicts,” Bonifacio stated.
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--- Written by Frederic Guetin, StoneX TV Producer
--- Expert: Marcelo Bonifacio, StoneX Brazil Market Intelligence Analyst
Sugar
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