Sugar prices Friday extended this week’s parabolic rally, with NY sugar posting a 6-3/4 month high and London sugar posting a 2-1/2 month high. Sugar prices are soaring as drought conditions in Brazil threaten its sugarcane crops. Gains in sugar accelerated Friday after Rabobank cut its 2024/25 Brazil sugar production forecast to 39.3 MMT from a previous forecast of 40.3 MMT.
Fund buying supported sugar prices this week after meteorologist Climatempo said hot and dry conditions will persist in Brazil’s sugar-producing areas until next week. Drought and excessive heat have caused massive fires in Brazil that have damaged sugar crops in Brazil’s top sugar-producing state of Sao Paulo. Sugar cane industry group Orplana said that as many as 2,000 fire outbreaks affected up to 80,000 hectares of planted sugarcane in Sao Paulo. Green Pool Commodity Specialists said that as much as 5 MMT of sugar cane may have been lost due to the fires.
In the Thailand that may damage the country’s sugarcane crops is bullish for sugar prices. On May 6, Thailand’s Meteorological Department said that more than three dozen of Thailand’s 77 provinces posted record-high temperatures in April, with new highs beating records as far back as 1958. Sugar millers in Thailand are reporting the lowest yield from crushed cane this year in at least 13 years. However, Thailand’s government on April 22 estimated that Thailand’s 2023/24 sugar production from Dec-Apr 17 was 8.77 MMT, above a Feb estimate from the Thai Sugar Millers Corp for sugar production of 7.5 MMT. Thailand is the world’s third-largest sugar producer and the second-largest sugar exporter.
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