KUALA LUMPUR, June 22 (Bernama) -- Bursa Malaysia ended on a softer note today as investors engaged in profit-taking following the recent rebound in the local market, an analyst said. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) declined by 0.65 per cent, or 11.19 points, to 1,700.84 from last Friday's close of 1,712.03. The benchmark index opened 1.56 points lower at 1,710.47 and moved between 1,699.94 and 1,712.32 throughout the trading session. Market breadth was negative, with decliners outnumbering gainers 560 to 481. A total of 608 counters were unchanged, 1,649 untraded, and 14 suspended. Turnover slipped to 3.29 billion units worth RM2.40 billion from 3.45 billion units worth RM3.79 billion on Friday.
Brazil’s wildfires and drought, which have disrupted the global sugar market, are putting increased pressure on Thailand and India to fill the supply gap. However, both countries are facing their own challenges, raising concerns about further instability in the market.
The recent spike in sugar futures, reaching the highest levels since February, reflects fears over crop damage in Brazil, the world’s top sugar producer and exporter. This disruption is pushing up costs for consumer goods, such as soft drinks and candy, while traders are now focused on the output prospects of Thailand and India, both major sugar producers.
While Thailand, the world’s second-largest sugar exporter, is expected to see a rebound in sugar production in the 2024-25 season, September floods have highlighted the weather risks that could delay the harvest if heavy rains persist. In India, the second-largest sugar grower, government support for ethanol production means sugar export restrictions are likely to continue.
“The sugar market is sitting on a powder keg, and we just need another light to set it on fire,” said Henrique Akamine, head of sugar and ethanol at Tropical Research Services.
Supply Shock and Price Surge
The unexpected supply shock from Brazil’s adverse weather has already caused raw-sugar futures to surge by 19% in New York this month. Speculators are turning bullish, and analysts predict the market has more room to rally as net-long positions remain below historical highs.
“Sugar has one of the clearest bullish fundamental stories,” said John Stansfield, a senior analyst at DNEXT Intelligence. With a projected global trade deficit of up to 2.2 million tons of sugar in the first quarter of 2025, traders are concerned that Thailand’s production alone may not be enough to cover the shortfall.
Thailand’s Sugar Outlook
Thailand’s 2024-25 sugar output is expected to increase to 10.6 million tons, up from 8.8 million tons last year, according to analysts. However, the recent floods have raised concerns about potential delays in the harvest season, which could push the crushing of the new crop into January 2025, about a month later than usual. Such delays would come at a critical time when Brazil’s shipments typically slow, potentially leading to severe consequences for global supply.
India’s Export Uncertainty
India’s sugar production is projected at 30 million tons for the upcoming season, down about two million tons from the previous year due to ethanol production diversions. Although India theoretically has enough sugar to allow for 1.8 million tons of exports, most analysts do not expect the government to ease export restrictions, especially given the focus on ethanol production ahead of upcoming elections.
“It is now becoming clearer that India will prioritize the ethanol sector, and the world sugar market realistically cannot expect India to come to the rescue,” said Stansfield.
As Brazil’s supply issues persist, and both Thailand and India face their own uncertainties, the global sugar market remains on edge, with prices likely to rise further if any additional setbacks occur.
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