Buyers are facing difficulties building up stockpiles as crops in several regions have been poorer than expected. Low fertilizer application in Thailand, excessive rains in India, and dryness in Europe, Mexico and parts of China led to several downward revisions to supply estimates.

In Thailand, the world’s fourth biggest grower, all but 5 of 57 millers already stopped crushing due to a lower-than-expected harvest, the Thai Sugar Millers Corp. said. Egypt and Algeria recently announced measures to restrict sugar outflows from the countries.

Crop issues removed 4 million metric tons from world trade flows in the first quarter of this year, StoneX analyst Ricardo Nogueira wrote in a report. Such volumes would be crucial to help ease current tightness in global supplies, especially since it will take time before a large output from Brazil can reach destinations. 

However, Brazilian supplies may not bring much relief to the refined sugar market, said Michael McDougall, managing director at Paragon Global Markets. The country is the world’s top supplier of raw sweetener, but its production of refined is small.

Eoin Treacy's view

The global growing environment was impacted last year. That’s having an effect on agricultural product prices this year. However, the renewed enthusiasm for biofuels, continued strength of crude oil and Dollar weakness are probably more important factors in the recent strength in the soft commodity sectors.

White Sugar has had an orderly consolidation over the last year and is now breaking higher.
Orange Juice has been trending higher since early 2022 which suggests citrus rot and hurricane damage continue to have an impact on supply.
Soybeans continue to hold the succession of higher reaction lows.
Feeder cattle prices are trending higher in a rhythmic manner.
Cotton posted a large upside weekly key reversal in November and is firming from that area again now.