(Bloomberg) -- Raw sugar futures fell to a fresh four-month low as markets adjust to a brighter supply outlook from top growers Brazil, India and Thailand.

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The most-active March contract in New York fell as much as 3.5% to 18.24 cents a pound, extending declines from the prior session. Markets have corrected in line with estimates “more aligned with reality” for the current harvest in Center-South Brazil that is winding down, StoneX analyst Murilo Aguiar said in a Monday note.

Prices had surged to a high near 24 cents a pound last fall, as traders and analysts slashed production estimates in top coffee grower Brazil following a severe drought. But rains that began in the final months of 2024 have helped to alleviate some concerns.

There is also “increased supply from major players in the Northern Hemisphere, improving the outlook for trade flow tightness,” Aguiar added.

Easing supply concerns have caused the raw sugar spread to narrow, with the March futures contract commanding a premium of 0.87 cents over the May contract, the lowest intraday since September.

The expectations for higher supply in the current and upcoming season come as “global consumption remains hesitant, with many countries experiencing stagnation or even declines in annual growth,” said Claudiu Covrig, lead analyst at Covrig Analytics, noting sugar taxes and changing consumer behavior.

Still, the supply picture is precarious. If sugar prices continue to fall, Brazilian mills could reduce production and instead use cane for ethanol, Covrig said. Red rot disease and dry weather has hampered supplies in India, though traders continue to assess the possibility of sugar exports from the South Asian nation.

Current levels between 18 to 19 cents a pound are “a floor” for prices, Citi Research analysts said Monday. The analysts forecast a near-term price target of 21 cents a pound, and noted “significant upside risk” as sugar production in the world’s top growers “could still underperform.”

In other softs, cocoa futures in New York climbed as much as 3.3% to trade above $11,000 a ton before erasing gains, as strong sales from chocolate maker Lindt & Spruengli AG signaled resilient demand. Shares of the Swiss chocolatier rose the most since April after the company reported sales growth that beat analyst estimates, driven by strong performance in Europe.

The firm said it gained market share and is well positioned to navigate the volatile cocoa market. Still, 2025 will continue to be challenging for the chocolate industry with cocoa prices at historic levels at the end of 2024, the company said. Price increases to offset those costs “will be further required in 2025.”

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