Key Takeaways
- Global sugar prices saw a significant uptick, with March NY world sugar futures and December London ICE white sugar futures both trading higher.
- A potential reduction in India’s sugar exports for the 2025/26 season is a key driver for the current price increase, stemming from lower-than-anticipated export quotas.
- Recent forecasts from Brazil and India suggest record or near-record sugar production for the 2025/26 season, which has been a bearish factor for prices.
- Despite bearish production outlooks, short-covering in futures markets reflects immediate market sentiment reacting to export quota news.
Sugar Market Sees Sharp Gains Amidst Shifting Export Outlook
March NY world sugar #11 futures experienced a notable rise today, climbing +0.30 points to +2.11%. Similarly, December London ICE white sugar #5 futures saw an increase of +9.70 points, marking a +2.38% gain. These movements indicate a strong upward trend in the sugar market on the current trading day.
The surge in sugar prices is attributed to renewed buying interest, particularly in the futures market, driven by signals that India may export less sugar than previously projected. According to Bloomberg, India’s food ministry is considering a proposal to permit sugar mills to export 1.5 million metric tons (MMT) for the 2025/26 season, a figure lower than earlier estimates of 2 MMT. This development comes after India implemented an export quota system in the 2022/23 season due to reduced domestic production caused by late rains.
Factors Influencing Global Sugar Prices
The global sugar market has been under pressure in recent weeks due to expectations of ample global sugar supplies. This led to new lows for sugar futures, with London sugar reaching a 4.75-year nearest-futures low and NY sugar hitting a 5-year nearest-futures low. These price declines were largely attributed to strong sugar output from Brazil and indications of a global sugar surplus.
Further compounding the bearish sentiment, sugar trader Czarnikow revised its global sugar surplus estimate for the 2025/26 season upwards to 8.7 MMT, an increase of 1.2 MMT from its September forecast of 7.5 MMT. This upward revision underscores the market’s expectation of significant global sugar availability.
Brazil’s Record Production Outlook
The forecast for robust sugar production in Brazil continues to exert downward pressure on prices. Conab, Brazil’s agricultural forecasting agency, has raised its sugar production estimate for the 2025/26 season to 45 MMT, up from a previous forecast of 44.5 MMT. This indicates an expectation of record output from the world’s largest sugar exporter.
Data from Unica reveals that in the first half of October, Brazil’s Center-South region saw a +1.3% year-over-year increase in sugar output, reaching 2.484 million tons (MT). The proportion of sugarcane crushed for sugar by mills in this period also rose to 48.24% from 47.33% in the prior year. Cumulatively, Center-South sugar output through mid-October for the 2025-26 season increased by +0.9% year-over-year to 36.016 MMT. Adding to this perspective, Datagro projected on October 21st that Brazil’s Center-South sugar production for the 2026/27 season could reach a record 44 MMT, a +3.9% increase from the previous year.
India’s Shifting Production and Export Landscape
Signs of a larger sugar crop in India, the second-largest global producer, are also impacting market dynamics. The India Sugar Mill Association (ISMA) increased its 2025/26 India sugar production estimate to 31 MMT, up from an earlier forecast of 30 MMT, representing an +18.8% year-over-year rise. Additionally, ISMA reduced its estimate for sugar allocated to ethanol production to 3.4 MMT from a July forecast of 5 MMT. This reduction could potentially free up more sugar for export.
Abundant monsoon rains in India have raised expectations for a bumper sugar crop, potentially leading to increased sugar exports. As of September 30, India’s Meteorological Department reported cumulative monsoon rainfall at 937.2 mm, which is 8% above normal and the strongest monsoon in five years. Earlier, on June 2nd, India’s National Federation of Cooperative Sugar Factories projected a +19% year-over-year increase in India’s 2025/26 sugar production to 34.9 MMT, citing larger sugarcane acreage. This follows a significant -17.5% year-over-year decline in India’s sugar production for the 2024/25 season, which fell to a 5-year low of 26.1 MMT, according to ISMA.
Thai Sugar Production and Global Projections
The outlook for increased sugar production in Thailand, the third-largest sugar producer globally, also contributes to bearish price expectations. The Thai Sugar Millers Corp projected on October 1st that Thailand’s 2025/26 sugar crop would grow by +5% year-over-year to 10.5 MMT. This follows a +14% year-over-year increase in Thailand’s 2024/25 sugar production to 10.00 MMT, as reported by the Thai Office of the Cane and Sugar Board on May 2nd.
In contrast to market pressures, the International Sugar Organization (ISO) forecasted a global sugar deficit for the 2025/26 season on August 29th, marking the sixth consecutive year of projected deficits. ISO anticipates a global 2025/26 sugar deficit of -231,000 metric tons (MT), a notable reduction from the -4.88 MMT shortfall projected for 2024/25. Furthermore, ISO projects a +3.3% year-over-year increase in global sugar production to 180.6 MMT for 2025/26, with global sugar consumption rising by +0.3% year-over-year to 180.8 MMT.
The USDA’s bi-annual report on May 22nd projected a record 189.318 MMT in global sugar production for 2025/26, a +4.7% increase year-over-year. Global human sugar consumption was also expected to reach a record 177.921 MMT, up +1.4% year-over-year. The USDA forecasts a +7.5% year-over-year rise in global sugar ending stocks for 2025/26, reaching 41.188 MMT. The USDA’s Foreign Agricultural Service (FAS) predicted record sugar production in Brazil for 2025/26 at 44.7 MMT, a 2.3% increase year-over-year. FAS also anticipates India’s 2025/26 sugar output to jump by 25% year-over-year to 35.3 MMT, driven by favorable monsoons and expanded acreage. Additionally, FAS projected Thailand’s 2025/26 sugar production to increase by +2% year-over-year to 10.3 MMT.
Final Thoughts
The sugar market is currently navigating conflicting signals, with strong production forecasts from key global producers like Brazil and potential shifts in export policies from major players like India creating volatility. While bearish supply-side factors persist, recent short-covering indicates that market participants are reacting to immediate news regarding export quotas.
