Sugar set for biggest weekly gain since January on Brazil fires

Raw sugar headed for its biggest weekly jump since January as dry conditions and fires in top producer Brazil fuel production concerns.

Futures traded in New York are poised for a gain of about 7% this week after fires in Brazil threatened cane in the country. StoneX estimated that the blazes could reduce Brazil’s sugar output by 340,000 metric tons, while Czarnikow had a similar initial assessment of 365,000 tons.

“Over the past week the market upturn has been fueled by concerns over Brazilian output sparked by fires in Sao Paulo,” according to researchers at BMI. The impact could last through the coming year, as the fires have affected cane that was sprouting.

That comes as the global sugar market heads for a deficit. Sugar production for the 2024-25 season is trailing consumption by 3.58 million tons due to lower production, according to the latest projection from the International Sugar Organization.

Prices cooled on Friday, dipping as much as 1.3% before paring some of those losses.

The global sugar market has become “increasingly sensitive to developments in Brazil, given the output challenges and export restrictions in India,” BMI analysts added. India this week lifted restrictions on sugar mills and distilleries using cane juice to make ethanol, a move that’s likely to prolong sugar export curbs from the world’s second-biggest grower and tighten global supply.

“It is evident that market participants are focused on the impacts in the coming months,” said Rafael Crestana, senior risk management consultant at StoneX. Industry data in the next few weeks should indicate whether the impact on prices is short-term, as it seems, or long-term, he added.