Expectations for the end of the 2023/24 global cycle (Oct-Sept)
For 2023/24, where most of the players in the Northern Hemisphere have practically finished harvesting, the highlight is Brazilian production. The 2023/24 season (Apr-Mar) in the Center-South saw record sugarcane production and sugar output. Furthermore, according to StoneX's estimate, Brazil will contribute with around 94% of sugar production among the main players in the market between April/24 and September/24, given the start of the 2024/25 (Apr-Mar) season in the Center-South.
As a result, the country is expected to produce a record volume of 44.5 million tonnes in the 2023/24 global crop year (Oct-Sept), helping to offset the production drop in major players such as Mexico and Thailand.
In India, the second largest global producer, by the end of April/24, white sugar output totaled 31.4 million tonnes. With only 16 mills still operating, it is possible that by May the crop will be over. Faced with revisions to sugarcane productivity and an increase in the deviation towards ethanol production approved by the government, StoneX changed its estimate for India to 31.8 MMT (white value) for the current crop.
For the other players, with the crop practically finished, there were few changes to the outlook. However, it is worth highlighting the significant drops in Mexican and Thai production during the current season, which together add up to an estimated 2.8 MMT decrease. For Thailand, in addition to drier weather caused by the impacts of El Niño on the monsoon rainy season in 2023, there was a significant loss to other crops, such as cassava, which is more resistant to drought and was paying producers better between 2022 and mid-2023. As a result, the country should end the cycle at 8.8 million tonnes ( tel quel), down 20% from the previous crop.
As for Mexico, the unseasonably dry weather that has persisted since the 2022/23 season is expected to bring production to the lowest in more than a decade, with production in 2023/24 estimated at 4.7 MMT, compared to 5.2 MMT in the previous crop, already affected by the drought, down 9.6% from the previous season.
Considering the other players, a highlight on the positive side in 2023/24 was the European Union, which is expected to end the current crop with a production increase of 1 MMT.
StoneX estimate for the Global Sugar Balance (global crop calendar, Oct-Sept)
Expectations for the 2024/25 global cycle (Oct-Sept)
For the 2024/25 global cycle, the main highlight should be the recovery of some of the main producing regions in the Northern Hemisphere. With the exception of India, the outlook is optimistic for most of the global sugar players, many of which had to endure weather effects related to El Niño in 2023.
Weather expectations for 2024 already point to a transition to La Niña, with estimates pointing to a 49% chance of occurrence in the June-August period. According to the average of the statistical models, August should already present a weak La Niña, increasing in intensity in the following months.
In the 2024/25 cycle, the phenomenon's occurrence will be crucial for the global balance, especially as it should bring about a recovery or increase in production in major sugar producers and exporters, especially Thailand and Pakistan.
On the Asian continent, Thailand should see a significant recovery in the next crop, both due to gains in area and productivity related to the wetter weather during the monsoon phase. StoneX expects the country to increase its production by 23.1% in 2024/25 (Oct-Sept), reaching 10.8 MMT.
As for India, expectations remain pessimistic on the supply side. The country is expected to inherit less productive cane due to the drought in the country's southern states in 2023, with the ethanol policy also playing a role in limiting any more significant increases in sugar production.
Due to the drought in 2023, StoneX expects the sugarcane area in India to fall by around 3%, with the possibility of larger falls in the southern regions, where the weather was better last year. As a result, the outlook for India is for a drop of 9.4% in 2024/25 (Oct-Sept). Looking at the Asian continent as a whole, StoneX's outlook is for a drop of 0.9% in 2024/25, driven by increases in production in Pakistan, Thailand and China, despite the expected decrease of 3 MMT in India.
Sugar production in the main Asian players (million tonnes)
Considering the outlook for the European continent, whose sugar production comes from sugar beet, estimates are once again optimistic after the sharp drop in the 2022/23 crop, impacted by weather factors. In the EU and the UK, the aggregate increase in area should be 8% in 2024/25, responding to the price factor and a good condition of the soils, which inherited good rains from 2023 as a whole.
Despite this, with the excess rainfall seen in the fourth quarter of 2023 in France, Germany and the United Kingdom - which delayed the planting stage of the crops, it is understood that sugar production in the European Union and the United Kingdom is expected to grow by 5.6% in 2024/25, reaching 17.4 MMT.
For the Americas, sugar production in Central America, the Caribbean and North America is expected to recover in 2024/25. The weather, which severely damaged some players such as Mexico and Guatemala in the 2023/24 season, tends to be milder in 2024, providing productivity gains. As a result, Central America is expected to produce 5.6 million tonnes (raw value) of sugar in 2024/25, mainly due to a year of productive recovery in the region's main player, Guatemala, which is expected to grow by around 13%, reaching 3.0 MMT of production.
As for the United States, the start of US beet planting was slightly delayed due to above-average rainfall and lower temperatures in the main states. Despite this, the weather has been favorable in April and May 2024, leading us to believe that, with improved conditions for beet and a recovery in sugarcane production, the country should produce 8.5 MMT in 2024/25, an increase of 1.6% compared to 2023/24.
As for the world's main producer, Brazilian supply is expected to fall by up to 7% in the 2024/25 global crop calendar (Oct-Sept), considering the Center-South and North-Northeast. This is because it is understood that the 2024/25 (Apr-Mar) crop in the Center-South is expected to be shorter, with a lower concentration of production between the end of 2024 and the beginning of 2025, resulting in an 8.3% lower contribution from the region to the global balance in 2024/25.
As for the North-Northeast region of the country, in the 2024/25 crop calendar (Oct-Sept), production is expected to grow by 8.2%, driven by more favorable weather due to La Niña, as well as a favorable scenario for investments in the sector and maximization of the production mix for sugar, consolidating a production of 3.8 MMT for the region.
Sugar production in the Americas in the 2024/25 global cycle (Oct-Sept)
*StoneX estimates. Sources: USDA, CONADESUCA, Engicaña, StoneX. Design: StoneX.
Given the above developments, StoneX's view is of a sequence of surpluses in the Global Sugar Balance, of 3.9 MMT in 2023/24 and 2.5 MMT in 2024/25, creating a scenario of bearish fundamentals for the price in the medium term. The higher global production in relation to demand already seems to have been internalized by the market, and the start of the 2024/25 crop (Apr-Mar) has had a bearish influence on prices during April and March/24. However, there are still uncertainties in the market, especially considering the extent of the impacts of drier weather on the 2024/25 (Apr-Mar) season in the Brazilian Center-South.
For 2024/25 (Oct-Sept), the drop in India and lower availability in the Oct-Sept crop calendar by Brazil should be important points in terms of supply, but in the next global crop they will be offset by recovery in major producers, especially Thailand.
On the demand side, in addition to the structural factors of population growth, consumption should also be more stimulated in the medium term given the recent fall in NY#11 prices. Therefore, international sugar consumption in 2024/25 is projected to grow by 1.0% compared to 2023/24, with a volume of 194.1 million tonnes (raw value), with production estimated at 196.6 million tonnes.
Global sugar balance (MMT) and stocks/demand ratio (%)
Source and Design: StoneX.
