The global Sugar market exhibited divergent trends throughout September 2024. While prices surged in the Brazilian market during this period, they trended downwards in the Asian market. The primary driver behind the price surge in Brazil is a shortage of supply, stemming from the deteriorating condition of Sugarcane crops. Adverse weather conditions have significantly affected crop yields, hampered Sugar production, and reduced overall market availability.  In contrast, the Asian market saw a decline in prices due to ample supply and consistent import levels. Favorable weather conditions in major Asian Sugar-producing countries, along with stable harvests, ensured adequate market availability, thereby exerting downward pressure on prices.

In Brazil, Sugar prices surged by 2.1% throughout September 2024, driven by a significant drop in production due to adverse weather conditions linked to El Niño. These conditions devastated the previous crop, raising concerns about reduced yields in the current harvest and triggering fears of a supply shortage. In the last week of August 2024, Sugar production in Brazil's key centre-south region was 3.26 million metric tonnes, a 6% decline compared to the same period last year. This production downturn was further aggravated by fires in Brazil's Sugarcane fields, especially in the top-producing state, causing additional disruptions. The two major Sugar and ethanol producers indicate substantial damage from these fires. Meanwhile, rising demand from parts of the Asia-Pacific region as buyers anticipate future supply shortages, has supported increased trade activity and reinforced the price surge.

The broader impact of this demand is evident in the FAO Food Price Index, which tracks international food commodity price changes. In September 2024, the index averaged 124.4 points, up 3.0% from August and 2.1% year-on-year. The FAO Sugar Price Index showed the most significant rise, jumping 10.4% in September alone, underscoring the global influence of Brazil's supply challenges.

In contrast, prices in the Asian market, particularly in India and China, plunged, marking a shift from the upward trend seen the previous month. The primary driver of this decline is an oversupply in the domestic market, resulting from severe port congestion and delays in exports. Heavy rains and flooding, especially along India’s western coast, have disrupted port operations, leading to significant stockpiles of Sugar intended for export, which has boosted domestic availability. Despite these logistical challenges, demand in India remains strong, driven by robust industrial demand from the food processing sector, which continues to operate at high levels. However, global Sugar prices also saw upward pressure due to deteriorating crop conditions in Brazil, the world’s largest Sugar producer and concerns over India potentially diverting Sugarcane for ethanol production, which could impact export availability.

According to ChemAnalyst, global Sugar prices are expected to rise in the coming months, driven by strong demand from the food and beverage sector during the festive season in Asia. Despite this, supplies are anticipated to remain robust. The Foreign Agricultural Service (FAS) in New Delhi has raised its 2024/2025 forecast, projecting a 4% increase in centrifugal Sugar production to 35.5 million metric tons (MMT) on a raw value basis (33.2 MMT of crystal Sugar). This revision is supported by favorable weather conditions, sufficient monsoon rainfall, and an improved recovery rate.