Global sugar supplies set to plunge to six-year low amid Brazilian drought

Global sugar supplies are on track to reach their lowest level in six years by early 2025, as production in Brazil, the world’s largest sugar exporter, falters due to severe drought. This alarming forecast comes from commodity trading firm Czarnikow Group Ltd., highlighting the growing concerns over global sugar shortages.

Drought impacting Brazilian production

Pedro Mizutani, head of raw sugar trading at Czarnikow, revealed at a conference in São Paulo that Brazil’s sugarcane crops have been severely affected by drought conditions, according to Bloomberg.

The extreme weather has hindered sugar production during the final months of the current season and delayed the start of the next harvest.

According to Mizutani, the sugarcane harvest in Brazil's key production regions will not commence until the second half of April—several weeks later than usual.

This delay, coupled with the impact of plant diseases, has fueled fears over declining Brazilian output. Sugar prices have remained consistently above the historical average in recent years, reflecting the world’s heavy dependence on Brazil’s sugar exports.

Global reliance on Brazil

Brazil is expected to account for approximately 75% of the global raw sugar trade this year, according to consultancy firm Datagro. The tight supply situation has led traders to pay a premium for sugar shipments due in March compared to those scheduled for May. This price surge has been evident since September, underscoring the strain on global sugar availability.

First-quarter supply to be ‘extremely tight’

Luis Silvestre Coelho, chief trader at Sucres et Denrées SA, echoed these concerns at the same conference. He warned that sugar supplies would be "extremely tight" in the first quarter of 2025, even if a reduced global demand and an increased crop in China help offset Brazil's production shortfall.

Despite these potential mitigating factors, the outlook remains concerning, as Brazil’s prolonged drought continues to disrupt global sugar markets, keeping prices elevated and adding pressure to global trade flows.