Report Information - Report Date: June 23, 2025 [1] - Report Title: 2025 Sugar Futures Semi - annual Market Outlook - Fulfilling Weak Expectations [2] - Analyst: Zhou Xiaoqiu, Investment Consulting Qualification Number: Z00001891 [3] Report Industry Investment Rating No relevant content provided. Core Viewpoints - In the second half of 2025, the price of New York raw sugar is expected to be weak, with a focus on Brazil's production and India's exports. Domestic sugar production will change little, production costs will rise slightly, and the total import volume and structure are crucial. The market will trade around the policy expectations of regular imports and substitute imports. The expected price range of Guangxi white sugar spot in the second half of 2025 is 5,600 - 6,100 yuan/ton [3][41] Content Summaries by Section 2025 H1 Sugar Futures Trend Review - The sugar futures showed a trend of rising first and then falling. From January to March, the domestic sugar market was led by New York raw sugar and futures led spot prices, with an overall upward trend. Starting from April, the New York raw sugar price dropped significantly from its high, dragging down domestic prices. From mid - May, the out - of - quota import cost fell below the spot price, suppressing the futures price. In H1 2025, the domestic market was in a positive basis state. The out - of - quota import cost fluctuated between 5,700 - 7,300 yuan/ton, the futures index between 5,700 - 6,200 yuan/ton, and the white sugar spot (Nanning) between 6,000 - 6,250 yuan/ton. The linked white sugar sales price for Guangxi sugarcane in the 24/25 crush season was 6,300 yuan/ton [6] - **First Stage (January - March 2025)**: India's unexpected production cut and low precipitation in Brazil led to a surge in New York raw sugar prices. NFCSF successively revised down India's sugar production estimates. In Q1 2025, precipitation in São Paulo, Brazil's main sugarcane - producing area, was low [9] - **Second Stage (April - June 2025)**: A sharp drop in crude oil prices and accelerated crushing in Brazil caused the New York raw sugar price to fall from its high. In April 2024, the US imposed reciprocal tariffs globally, raising recession expectations and causing a sharp drop in crude oil prices. Brazil's 25/26 crush season started, with an accelerating crushing progress and a significant increase in MIX [9] 2025 H2 Sugar Futures Outlook: Fulfilling Weak Expectations International Market: Key Focus on Brazil and India's Production - **Supply Shift from Shortage to Surplus**: The 24/25 crush season had a global sugar supply shortage, with different institutions estimating shortages ranging from 467 - 700 million tons. The 25/26 crush season is expected to have a supply surplus, with estimates of surplus ranging from 40 - 1,140 million tons [10] - **Brazil's Production Recovery**: In the 24/25 crush season, Brazil's sugar production decreased due to drought. UNICA and Conab data showed declines in cane crushing volume, MIX, and sugar production. In the 25/26 crush season, Conab expects an increase in sugar production due to a higher MIX, reaching a record high [14] - **India's Production Recovery**: In the 24/25 crush season, India's sugar production fell more than expected. NFCSF's estimates were continuously revised downwards. In the 25/26 crush season, favorable factors such as high monsoon precipitation in 2024 and rising cane purchase prices are expected to lead to a significant increase in production [18] - **Thailand's Production Increase and EU's Production Decrease**: In the 25/26 crush season, Thailand's sugar production is expected to increase due to the recovery of cane production and higher purchase prices. The EU's sugar production is expected to decline due to lower planting returns and drought, which is beneficial for widening the raw - refined sugar price spread [22][23] Domestic Market: Key Focus on Import Volume and Structure - **Production Increase but Persistent Supply Gap**: In the 24/25 crush season, China's sugar production increased, but import volume and rhythm were key factors. The control of syrup and premix imports tightened in 2025, resulting in lower - than - expected imports. In the 25/26 crush season, production is expected to remain high, and inventory accumulation is likely due to a significant drop in out - of - quota import costs [26] - **Likely Increase in Domestic Sugar Production Costs**: In the 24/25 crush season, Guangxi's sugar production cost decreased. In the 25/26 crush season, assuming the same cane purchase price, different scenarios of production rate changes are likely to lead to an increase in production costs [30] - **Low Industrial Inventory**: As of the end of May 2025, China's sugar industrial inventory was low. The cumulative sales rate was 72.69%, and the industrial inventory was 305 million tons, lower than the average level since the 15/16 crush season [33] - **Filling Method of Supply Gap Determines Pricing Anchor**: In the 24/25 crush season, the domestic sugar supply shortage was estimated at 465 million tons, and the filling method (substitutes, imports) determines the pricing anchor [37] Conclusion and Investment Outlook - **Conclusion**: Internationally, weak expectations are being fulfilled, and the New York raw sugar price is under pressure. Domestically, the total import volume and structure remain the core of trading. In the 24/25 crush season, despite increased production, low industrial inventory and strong spot prices led to a shift in the pricing anchor. In the 25/26 crush season, if imports remain the same, the supply will still be tight, and pricing will continue to be anchored to out - of - quota import costs [40] - **Investment Outlook**: In the second half of 2025, the New York raw sugar price is expected to be weak, with a focus on Brazil's production and India's exports. Domestic production will change little, production costs will rise slightly, and the total import volume and structure are crucial. The market will trade around import policy expectations, and the expected price range of Guangxi white sugar spot is 5,600 - 6,100 yuan/ton [41]

Core Viewpoint - New York raw sugar prices have stopped declining due to market speculation that sugar mills will shift to using more sugarcane for ethanol production rather than for sweeteners [1] Group 1: Market Trends - The most active futures contract rose by 1.3% before narrowing its gains [1] - Prices have been on a downward trend in recent weeks, closing at a four-year low last Friday, primarily influenced by expectations of ample supply from major sugar-producing countries [1] Group 2: Supply Concerns - There are growing concerns that Brazil, the world's largest sugar exporter, may see its production affected by weak prices [1] - While most market estimates suggest Brazil will maximize its sugar production this year, sugar mills located far from port areas face risks due to higher transportation costs [1] Group 3: Production Shifts - These sugar mills may find producing biofuels more profitable, as biofuels are typically used for the domestic market [1]

Research Report Summary 1. Report Industry Investment Rating No information provided. 2. Core View of the Report The sugar market maintains an internal - strong and external - weak pattern. The international market is expected to be mainly in a low - level consolidation, while the domestic market will continue the internal - strong and external - weak situation [3][26]. 3. Summary by Catalog 3.1 Weekly Market Review - **International Market**: The US dollar index is 100.98 (previous value 100.42), the US dollar against the Brazilian real is 5.69 (previous value 5.65), WTI crude oil price is $61.93 per barrel (+1.42%), and the New York raw sugar active contract price is 17.56 cents per pound (-1.46%). As of May 13, the net long positions of funds increased by 9,135 lots to 20,404 lots. As of May 1, the 25/26 season's cumulative sugar production in the central - southern region of Brazil was 1.58 million tons, a year - on - year decrease of 1 million tons. As of April 30, the 24/25 season's sugar production in India was 25.7 million tons, a year - on - year decrease of 5.77 million tons. As of April 9, the 24/25 season's sugar production in Thailand was 10.05 million tons, a year - on - year increase of 1.31 million tons [1]. - **Domestic Market**: The spot price of Guangxi Group is 6,170 yuan per ton, a week - on - week increase of 20 yuan per ton; the main contract of Zhengzhou sugar is 5,855 yuan per ton, a week - on - week increase of 16 yuan per ton; the basis of the main contract remained flat. As of the end of April, the 24/25 season's sugar production in China was 11.11 million tons, a year - on - year increase of 1.15 million tons. CAOC predicts that the domestic sugar production in the 24/25 season will be 11 million tons, consumption will be 15.8 million tons, and imports will be 5 million tons. As of the end of March, the cumulative sugar imports in the 24/25 season in China were 1.61 million tons, a year - on - year decrease of 1.45 million tons [2]. 3.2 Next Week's Market Outlook - **International Market**: It will be mainly in a low - level consolidation. Macroscopically, the US dollar stabilizes and rebounds, the US stock market rebounds, and market sentiment stabilizes. In the industry, the market is in a pattern of strong reality and weak expectation. In the 24/25 season, a slight reduction in Brazil's production and a significant decline in India's production are bullish factors, while a large - scale increase in production in both the Northern and Southern Hemispheres in the 25/26 season is bearish. The New York raw sugar rebounds after offering processing profits and corrects due to the decline in crude oil prices, generally oscillating in a low - level range. Attention should be paid to Brazil's production and export rhythm and India's relevant industrial policies [3][26]. - **Domestic Market**: The internal - strong and external - weak pattern will be maintained. In the 24/25 season, the domestic market expects continuous production increase and cost reduction. The import policies for syrup and premixed powder are tightened, and domestic prices are moving closer to the cost of out - of - quota imports. In terms of trend, Zhengzhou sugar follows raw sugar, and trading is centered around the import rhythm. From January to March, conventional imports and imports of syrup and premixed powder decreased significantly year - on - year. Drought in Guangxi threatens the sugar production in the 25/26 season, and the internal - strong and external - weak pattern continues. Opportunities for narrowing the internal - external price difference should be continuously monitored in the second quarter [3][26]. 3.3 Macro Data - **Exchange Rate**: The US dollar index is 100.98 (previous value 100.42), and the US dollar against the Brazilian real is 5.69 (previous value 5.65) [6]. - **Crude Oil**: The WTI crude oil price is $61.93 per barrel (+1.42%) [6]. 3.4 Industry Data 3.4.1 Market Price and Trading Data - **Price and Basis**: The New York raw sugar active contract price is 17.56 cents per pound (-1.46%). The spot price of Guangxi Group is 6,170 yuan per ton, a week - on - week increase of 20 yuan per ton; the main contract of Zhengzhou sugar is 5,855 yuan per ton, a week - on - week increase of 16 yuan per ton; the basis of the main contract remained flat. As of the end of April, the 24/25 season's sugar production in China was 11.11 million tons, a year - on - year increase of 1.15 million tons. CAOC predicts that the domestic sugar production in the 24/25 season will be 11 million tons, consumption will be 15.8 million tons, and imports will be 5 million tons [14]. - **Warehouse Receipts**: As of last weekend, the Zhengzhou white sugar warehouse receipts were 32,580 lots [15]. - **CFTC Latest Position Report (New York Raw Sugar)**: As of May 13, long positions of funds increased by 4,865 lots, short positions decreased by 4,270 lots, and net long positions increased by 9,135 lots year - on - year to 20,404 lots, showing a slight increase [15]. 3.4.2 Industry Supply - Demand Data - **Global Supply - Demand**: The International Sugar Organization (ISO) predicts a supply shortage of 5.47 million tons in the 24/25 season (previous forecast shortage of 4.88 million tons) [19]. - **Brazil**: As of April 16, in the 25/26 season, the cumulative crushed cane in the central - southern region of Brazil was 17 million tons, a year - on - year increase of 2.99%; sugar production was 730,000 tons, a year - on - year increase of 1.25%; alcohol production was 920 million liters, a year - on - year increase of 11.54%; the cumulative ratio of cane for sugar production was 44.77%, compared with 44.08% in the same period of the previous year [19]. - **India**: As of April 30, the 24/25 season's sugar production in India was 25.7 million tons, a year - on - year decrease of 5.77 million tons [19]. - **Thailand**: As of April 9, the 24/25 season's sugar production in Thailand was 10.05 million tons, a year - on - year increase of 1.31 million tons [20]. - **China's Supply - Demand Data**: CAOC predicts that in the 24/25 season, domestic sugar production will be 11.15 million tons, consumption will be 15.8 million tons (+100,000 tons), and imports will be 5 million tons; in the 25/26 season, domestic sugar production will be 11.2 million tons, consumption will be 15.9 million tons (+100,000 tons), and imports will be 5 million tons. Customs data shows that in March 2025, sugar imports were 70,000 tons, and the cumulative sugar imports in the 24/25 season were 1.61 million tons [20]. - **China's Production and Sales Data**: As of the end of April, in the 24/25 sugar - making season, the national sugar production was 11.11 million tons, a year - on - year increase of 1.15 million tons. The national sugar sales were 7.24 million tons, a year - on - year increase of 1.5 million tons. The cumulative sugar sales rate was 65.22% [20]. 3.5 Operation Suggestions Same as the content of next week's market outlook, with international market in low - level consolidation and domestic market maintaining the internal - strong and external - weak pattern [26].