Hedgepoint readjusts forecasts for global sugar market

Raw sugar prices recovered some ground late last week after the release of first-half May results from Unica (the Brazilian Sugarcane Industry Association). The report, according to analysis by Hedgepoint, was somewhat mixed, sparking a debate over whether it provided enough information about the overall health of the crop to justify further revisions.

Crushing reached 42,3 Mt, exceeding the five-year average of 41,5 Mt but still behind the 24/25 season. The cumulative gap has widened to almost 20 Mt, with 76,7 Mt crushed to date, compared to 96,2 Mt during the same period last year.

However, according to Lívea Coda, Market Intelligence Coordinator at Hedgepoint Global Markets, two important factors should not be ignored: first, most of this delay is due to the second half of April, which recorded the highest number of days lost estimated for this period. Second, the early part of the 24/25 season benefited from an exceptionally high volume of cane repeated from the 23/24 season.

Total Recoverable Sugar (TRS) sustained a bullish tone for prices, remaining approximately 5% below last year’s levels. On the other hand, the sugar mix provided some relief to the market, reaching a record (over 51%) in the fortnight, easing concerns about cane quality in terms of sugar content (reducing sugars).

“As a result, the market reaction was mixed. While April’s productivity figures remain concerning, the report itself offered little new information in this regard. Before making any significant adjustments to sugarcane volume estimates, we will wait for additional data,” he said.

“While we wait for May to close, our current estimate remains optimistic at 620 Mt of sugarcane for the Center-South of Brazil, supported by the excellent Vegetation Health Index. However, we do not rule out the possibility of a downward revision, especially if productivity continues to suffer, despite the positive health indicators, or if weather conditions deteriorate,” Lívea ponders.

According to the analyst, last week brought some bullish sentiment due to frost risks, but no significant impact was reported and prices showed limited reaction. Still, this remains a factor to be monitored closely. “To better prepare ourselves, however, it is essential to consider how trade flows may change if results from the Center-South fall short of our current projections,” she says.

Following Unica’s latest report, Hedgepoint made minor adjustments to its figures. The ATR estimate was revised downwards to 140,5 kg/t, while the sugar mix was adjusted upwards to 51,2%. Overall sugar production remained stable at around 42,5 Mt. With this production, the Center-South could export 33,6 Mt, keeping stock levels stable.

In the company's estimates, assuming all other factors remain constant, this would result in a surplus of 3,7 Mt in trade flows from the second quarter of 2025 to the third quarter of 2026. For Lívea Coda, this scenario leaves little room for a recovery in prices, especially for raw sugar, since Brazil is its largest supplier.

“As an exercise, we consider a reduction of 15 Mt in sugarcane volume, bringing the total to 605 Mt. Without changes in the sugar mix or in the ATR, this would result in approximately 1 Mt less sugar production, directly impacting export capacity. Consequently, the accumulated trade surplus would also decrease by almost 1 Mt,” he says. 

The analyst also emphasizes that this adjustment would support a more bullish narrative for the sugar market, potentially strengthening the March 2026 contract, even if the surplus projected for the end of 2025 is softened. Still, prices would remain far from when observed conditions were in deficit. For sugar prices to return to the highs observed in 2022-2023, a more significant deterioration in sugarcane availability would be necessary. “All else being equal, Brazil would need to lose up to 45 Mt from the current estimate to trigger a major upward trend.”

Current market discussions of a crop closer to 600Mt would still imply a surplus, which could limit any strong upward momentum. However, if demand holds, prices could still rise above 20c/lb.

“Therefore, while we await further data releases, maintaining a cautious stance is essential for effective risk management. Gaining a clearer understanding of developments in the Northern Hemisphere will also be critical going forward,” he says.