Key Takeaways
- Sugar futures experienced mixed trading, with New York contracts closing higher and London contracts settling lower.
- A stronger Brazilian real supported New York sugar prices by discouraging exports, while a robust global supply outlook exerted downward pressure.
- Production forecasts from Brazil, India, and Thailand indicate ample sugar supplies for the 2025/26 season, contributing to bearish sentiment.
- Despite some forecasts of global sugar deficits, upward revisions in production estimates from major producing countries are currently dominating market dynamics.
Market Movements and Influencing Factors
On Tuesday, March NY world sugar #11 (SBH26) closed up by +0.05%, or +0.35%. In contrast, December London ICE white sugar #5 (SWZ25) finished the trading day down -0.30%, or -0.07%.
📍 The mixed settlement for sugar prices was influenced by currency fluctuations and supply expectations. New York sugar found support due to the significant strength of the Brazilian real. The real (^USDBRL) surged to a 17-month high against the US dollar, which curbed export sales from Brazilian sugar producers and led to short-covering activity in New York sugar futures.
Global Supply Outlook and Price Pressures
The prevailing expectation of ample global sugar supplies has put considerable downward pressure on sugar prices over the past month. London sugar previously hit a new 4.75-year nearest-futures low, and New York sugar prices reached a 5-year nearest-futures low recently. These declines were primarily attributed to increased sugar output from Brazil and projections of a global sugar surplus.
📊 Sugar trader Czarnikow revised its global 2025/26 sugar surplus estimate upwards to 8.7 million metric tons (MMT), a notable increase from its September forecast of 7.5 MMT.
Brazilian Production Trends
Record Output Expectations in Brazil
The forecast for record sugar output in Brazil is a significant bearish factor for sugar prices. Brazil’s crop forecasting agency, Conab, raised its Brazil 2025/26 sugar production estimate to 45 MMT, up from a previous forecast of 44.5 MMT.
Unica reported that Brazil’s Center-South sugar output in the first half of October saw a year-on-year increase of 1.3% to 2.484 million metric tons. Furthermore, the proportion of sugarcane being crushed for sugar by mills in this region rose to 48.24% from 47.33% in the same period last year. Cumulative Center-South sugar output through mid-October for the 2025-26 season also increased by 0.9% year-on-year to 36.016 MMT.
In related projections, Datagro forecasted on October 21 that Brazil’s Center-South 2026/27 sugar production would climb by 3.9% year-on-year, potentially reaching a record 44 MMT.
Indian Sugar Production and Export Potential
Shifting Estimates in India
Signs pointing to a larger sugar crop in India, the world’s second-largest producer, are also contributing to price weakness. The India Sugar Mill Association (ISMA) increased its 2025/26 India sugar production estimate to 31 MMT from an earlier forecast of 30 MMT, representing an 18.8% year-on-year increase.
⚡ Additionally, ISMA reduced its estimate for sugar diversion to ethanol production in India to 3.4 MMT from a July forecast of 5 MMT. This adjustment could free up more sugar for export from India.
Monsoon Impact and Ethanol Diversion
The prospect of increased sugar exports from India carries negative implications for sugar prices. Abundant monsoon rains have raised expectations for a bumper sugar crop. As of September 30, India’s Meteorological Department reported cumulative monsoon rainfall at 937.2 mm, which is 8% above normal and marks the strongest monsoon in five years.
Previously, on June 2, India’s National Federation of Cooperative Sugar Factories projected a 19% year-on-year increase in India’s 2025/26 sugar production to 34.9 MMT, citing larger planted cane acreage. This projected increase follows a significant 17.5% year-on-year decline in India’s sugar production for the 2024/25 season, which resulted in a 5-year low of 26.1 MMT, according to ISMA.
💡 Another bearish factor comes from sugar trader Sucden’s assertion that India may only divert 4 MMT of sugar for ethanol production in the 2025/26 season. This quantity might not be sufficient to absorb the country’s sugar surplus, potentially prompting Indian sugar mills to export as much as 4 MMT, exceeding earlier expectations of 2 MMT.
Thai Sugar Production Outlook
Increased Output Expected in Thailand
The outlook for higher sugar production in Thailand also presents a bearish scenario for prices. The Thai Sugar Millers Corp projected on October 1 that Thailand’s 2025/26 sugar crop will increase by 5% year-on-year to 10.5 MMT. This follows a 14% year-on-year rise in Thailand’s 2024/25 sugar production to 10.00 MMT, as reported by Thailand’s Office of the Cane and Sugar Board on May 2.
📌 Thailand holds the position of the world’s third-largest sugar producer and the second-largest exporter.
International and USDA Forecasts
ISO Projects Supply Dynamics
The International Sugar Organization (ISO) had forecasted a global sugar deficit for the 2025/26 season on August 29, marking the sixth consecutive year of such projections. The ISO anticipates a global 2025/26 sugar deficit of -231,000 MT, a smaller shortfall compared to the -4.88 MMT deficit projected for 2024/25. The ISO also forecasts that 2025/26 global sugar production will rise by 3.3% year-on-year to 180.6 MMT, while global sugar consumption is expected to increase by 0.3% year-on-year to 180.8 MMT.
USDA’s Record Production Estimates
In its bi-annual report released on May 22, the USDA projected that global 2025/26 sugar production would climb by a significant 4.7% year-on-year to a record 189.318 MMT. The USDA also forecast that global 2025/26 human sugar consumption would increase by 1.4% year-on-year to a record 177.921 MMT. Global sugar ending stocks for 2025/26 were predicted by the USDA to rise by 7.5% year-on-year to 41.188 MMT.
The USDA’s Foreign Agricultural Service (FAS) further predicted that Brazil’s 2025/26 sugar production would rise by 2.3% year-on-year to a record 44.7 MMT. FAS also projected that India’s 2025/26 sugar production would increase by 25% year-on-year to 35.3 MMT, driven by favorable monsoon rains and expanded sugar acreage. Additionally, FAS anticipates that Thailand’s 2025/26 sugar production will increase by 2% year-on-year to 10.3 MMT.
Expert Summary
Sugar markets experienced mixed trading, with fundamental factors like currency strength offering localized support while broad expectations of substantial global supply continue to exert downward pressure. Production forecasts from key countries like Brazil, India, and Thailand point towards an abundant sugar season, suggesting that bearish supply-side elements are likely to remain dominant in the near term.
