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Simon Hood
Wilmar Manager Grower Marketing
As we move into December and the much-anticipated drop off in the Brazilian 2024 crush, the ICE #11 contract continues to trade in shallow downtrend pattern.
The recent UNICA report covering the first half of November crush finally saw the season to date numbers drop below last year’s record cumulative total. The data was roughly in line with expectations and the consensus for total Brazilian sugar out is narrowing into the mid to high 39 million tonne range.
Given the specs’ lack of conviction on pushing the market up or down due to trade resistance on either side, the futures price continues to zig zag sideways. At some point the market will break out of this pattern but we may have to wait a bit longer to get a decisive move.
India has received some focus in the near term with both this year and next in the frame. For the 2024 crush, which is getting under way, the latest Wilmar forecast has been revised down to 26.7M tonnes. This is primarily due to a poor monsoon in 2023 limiting national planting along with recent flooding and disease in Uttar Pradesh.
We remain of the view that India will not be a player in global trade for the immediate future as ethanol production absorbs future sugar juice production. Low sugar stocks this season will build slightly next year thanks to a very good 2024 monsoon, replenishing reservoirs and allowing more widespread planting of cane, which remains a highly viable crop for growers. If the 25/26 crop is as large as expected, India may resume an export campaign in late 2025 to early 2026.
The Thai crop has enjoyed a good growing season and is expected to produce a large crop of 11M tonnes of sugar this year. For the raw sugar market, the expectation is that exports will remain limited as local refining and liquid sugar exports into China absorb the majority of raw sugar consumption.
Overall, the anticipated move higher for sugar futures in the first quarter of next year remains a possibility. The longer-term outlook for the #11 contract looks less encouraging on an anticipated large Indian crop for 25/26 season.
#11 March 25 Futures Contract (USc/lb) – Daily price movement over the last six months.
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