Hedgepoint: Sugar market starts 2025 on a bearish note

In the last weeks of 2024, the sugar market saw low activity due to the end-of-year festivities, with prices remaining relatively stable throughout the last quarter.

According to Lívea Coda, Sugar and Ethanol Analyst at Hedgepoint Global Markets, “despite a challenging year with drought and fires, the Center-South region of Brazil surprised with positive results, reinforcing bearish expectations, especially in view of the expected recovery in the Northern Hemisphere. As a result, prices fell to 19c/lb and struggled to recover.”

The Center-South region has already crushed almost 603 Mt of sugarcane, exceeding expectations. “We believe that the harvest could reach 620 Mt of sugarcane and 40 Mt of sugar in 24/25, driven by good weather conditions, increasing optimism for 25/26 and putting downward pressure on sugar prices,” highlights Lívea.

India

In the Northern Hemisphere, India’s sugar production is 17,8% behind schedule (1,7 Mt) due to rains and year-end festivities such as Diwali. However, crushing in December was similar to the previous year, totaling 6,72 Mt in 2024, compared to 6,88 Mt in 2023. The main difference occurred in November, with 1,5 Mt less, reflecting the delay. “Although our forecast of 31 Mt is maintained, it is crucial to monitor the trend, considering factors such as diseases and area reduction, even with favorable weather,” points out the analyst.

Thailand

In Thailand, above-average rainfall during the sugarcane development period favored the harvest. “Sugar production in the first 20 days increased by 6%, with the season starting 4 days earlier than 23/24, reaching almost 1,4 Mt, in line with the figures for 22/23,” he highlights.

Central America

In Central America, harvest delays reduced production in Guatemala and El Salvador, contributing to a bullish outlook in the short term, but with expectations of recovery throughout the season compared to 23/24.

“Less than 500 kt of sugarcane were crushed in Guatemala, compared to more than 2 Mt in the same period of the previous cycle. El Salvador produced 83 kt of sugar, compared to 136 kt in the last season,” he points out.

European availability limits gains in the white premium. On the macro level, a strong dollar and a weak real encourage Brazilian producers to lock in future harvests, putting pressure on sugar prices in the short term.