Sugar Prices Surge as Drought Hits Brazil’s Cane Crop, Delaying Harvest

Global sugar supplies are predicted to reach their lowest levels in six years by early 2025, according to the Czarnikow Group Ltd. This forecast comes as extreme drought conditions in Brazil, the world’s largest sugar exporter, severely impact sugarcane production. With the drought damaging crop conditions and delaying next year’s harvest, global sugar prices are expected to remain elevated, reflecting the market's dependence on Brazilian sugar exports.

Brazil’s Drought Reduces Sugar Production

The ongoing drought in Brazil has not only worsened the condition of sugarcane crops but has also reduced the volume of cane processing in the final months of the current season. As plant diseases continue to spread and production outlooks dim, traders are paying close attention to Brazil’s sugar output. According to estimates from consulting firm Datagro, nearly 75% of all raw sugar sold globally this year will be produced in Brazil, underscoring the country’s critical role in the world sugar market.

Harvest Delays Signal Potential Shortages

Sugarcane harvesting in Brazil, typically starting earlier, will be delayed until the second half of April. This delay is already having an impact on the market. Premiums for March deliveries over May contracts have risen since September, signaling a potential supply shortage. While the reduced production in Brazil is concerning, experts point out that a decrease in global demand and a strong sugar harvest in China may partially offset the shortfall.

Recent Rainfall Tempers Speculative Price Growth

Increased rainfall in Brazil in recent weeks has tempered speculative buying in global soybean and sugar markets, leading to a decrease in sugar prices. On the London exchange, December futures for white sugar No. 5 fell by 3.9% to €518/ton (still 7.6% higher than prices on September 1, before the recent speculative growth). Meanwhile, March futures for cane sugar No. 11 dropped 3.9% to €440/ton, marking an 11.4% increase compared to early September.

Outlook: Brazil's Sugar Output Remains a Key Driver

Despite recent price fluctuations, the market remains highly sensitive to Brazil’s sugar production levels. As the drought continues to impact the cane crop and delays harvests, the world sugar market is likely to see ongoing volatility. While China’s increased production offers some relief, global sugar prices will largely depend on how Brazil’s next harvest unfolds.





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