Sugar prices have surged to $23.4 per pound, approaching a seven-month high, as factors such as fund buying and weather fluctuations in Brazil contribute to this increase. Hot and dry conditions, accompanied by fires in Brazil's principal sugar-producing region, São Paulo, have devastated up to 80,000 hectares of sugarcane, resulting in projected losses of 5 million metric tons (MMT).
In late August, Brazil's sugar production experienced a 6% decline compared to the previous year, further tightening supply and exerting upward pressure on prices. The International Sugar Organization (ISO) has also predicted a significant global sugar deficit for the 2024/25 cycle, creating additional supply concerns.
Challenging conditions are not limited to Brazil; India is currently enacting export restrictions while also revising its sugar production estimates downward. Moreover, extreme drought conditions in Brazil and record high temperatures in Thailand are compounding these issues, effectively bolstering sugar prices.
Since the start of 2024, sugar has risen by 2.70 cents per pound, reflecting a substantial increase of 13.12% according to trading on a contract for difference (CFD) tracking the benchmark market. Analysts predict that sugar will stabilize at approximately 18.96 cents per pound by the end of this quarter, while forecasts for the next 12 months estimate a price of 17.60 cents per pound.