Key Takeaways
- Sugar futures saw a modest increase, influenced by rising crude oil prices and their impact on ethanol demand, potentially shifting cane crushing away from sugar production.
- Despite recent gains, sugar prices have faced significant downward pressure over the last seven months, primarily due to anticipated robust sugar output from Brazil and favorable growing conditions elsewhere.
- Projections indicate substantial global sugar surpluses for upcoming seasons, with significant contributions expected from Brazil, India, and Thailand.
- While a few forecasts suggest a supply deficit, the prevailing market consensus points to an oversupplied scenario, likely to continue pressing sugar prices downward.
Recent Market Movements in Sugar Futures
New York’s March world sugar #11 futures (SBH26) experienced a gain of 0.26 points, marking a 1.72% increase. Concurrently, December London ICE white sugar #5 futures (SWZ25) rose by 5.10 points, an uptick of 1.17%.
⚡ This upward price movement appears to be a direct reaction to a sharp rally in crude oil prices, which has spurred short-covering activity in sugar futures. Crude oil futures (CLZ25) surged over 5% to a two-week high. The rise in crude oil positively impacts ethanol prices, potentially leading global sugar mills to prioritize ethanol production over sugar. Such a strategic shift could limit available sugar supplies, thereby providing support to sugar prices.
Market Dynamics and Recent Performance
Over the past seven months, sugar prices have been subjected to considerable downward pressure. New York sugar futures recently reached a new nearest-futures low, representing a 4.5-year low. Similarly, London sugar futures touched a 4.25-year low earlier this week.
📍 These declines are largely attributed to indications of increased sugar output from Brazil. Data from Unica revealed that Brazil’s Center-South sugar production for the latter half of September increased by 10.8% year-over-year, reaching 3.137 million metric tons. Furthermore, the proportion of sugarcane crushed for sugar by mills in this region saw an increase to 51.17% from 47.73% in the same period last year. Cumulatively, Center-South sugar output for the 2025-26 season through September showed a year-over-year increase of 0.8%, totaling 33.524 million metric tons.
Global Supply Outlook and Price Pressures
The persistent forecast for abundant global sugar supplies continues to exert downward pressure on prices.
Key Production Projections
- Consultant Datagro projects that Brazil’s Center-South sugar production for the 2026/27 season will increase by 3.9% year-over-year, anticipating a record output of 44 million metric tons.
- BMI Group has forecasted a global sugar surplus of 10.5 million metric tons for the 2025/26 season.
- Covrig Analytics projected a global sugar surplus of 4.1 million metric tons for the 2025/26 season.
The anticipated increase in sugar exports from India also contributes to a bearish outlook for prices. Abundant monsoon rains in India are predicted to result in a bumper sugar crop. As of September 30, cumulative monsoon rainfall was 8% above normal, marking the strongest figures in five years.
India’s National Federation of Cooperative Sugar Factories projected a significant 19% year-over-year rise in India’s 2025/26 sugar production to 34.9 million metric tons, attributed to increased sugarcane acreage. This follows a substantial decline of 17.5% year-over-year in India’s 2024/25 sugar production, which reached a five-year low of 26.2 million metric tons, according to the Indian Sugar Mills Association (ISMA).
📊 Adding to the bearish sentiment, sugar trader Sucden indicated that India might divert up to 4 million metric tons of sugar for ethanol production in the 2025/26 period. However, this diversion is considered insufficient to absorb the country’s projected sugar surplus. This situation could potentially prompt Indian sugar mills to export as much as 4 million metric tons, exceeding earlier expectations of 2 million metric tons. India is recognized as the world’s second-largest sugar producer.
The outlook for increased sugar production in Thailand also weighs negatively on prices. The Thai Sugar Millers Corp. projected that Thailand’s 2025/26 sugar crop will rise by 5% year-over-year to 10.5 million metric tons. This follows a 14% year-over-year increase in Thailand’s 2024/25 sugar production to 10 million metric tons, as reported by Thailand’s Office of the Cane and Sugar Board. Thailand holds the position of the world’s third-largest sugar producer and the second-largest exporter.
Conflicting Forecasts on Global Sugar Supply Balances
In contrast to the prevailing oversupply projections, the International Sugar Organization (ISO) has forecasted a global sugar deficit for the 2025/26 season. This would mark the sixth consecutive year of deficits. The ISO projects a shortfall of -231,000 metric tons for 2025/26, a notable improvement from the -4.88 million metric tons shortfall anticipated for 2024/25.
💡 The ISO also expects global sugar production to rise by 3.3% year-over-year to 180.6 million metric tons, while global sugar consumption is projected to increase by 0.3% year-over-year to 180.8 million metric tons in 2025/26.
The United States Department of Agriculture (USDA), in its bi-annual report released on May 22, projected that global 2025/26 sugar production would climb by 4.7% year-over-year to a record 189.318 million metric tons. The USDA also forecast record global human sugar consumption, increasing by 1.4% year-over-year to 177.921 million metric tons for the same period.
According to the USDA, 2025/26 global sugar ending stocks are predicted to increase by 7.5% year-over-year to 41.188 million metric tons. The USDA’s Foreign Agricultural Service (FAS) predicted Brazil’s 2025/26 sugar production to rise by 2.3% year-over-year to a record 44.7 million metric tons. Additionally, FAS forecast India’s 2025/26 sugar production to increase significantly by 25% year-over-year to 35.3 million metric tons, driven by favorable monsoon rains and expanded sugarcane acreage. The FAS also predicted a 2% year-over-year increase in Thailand’s 2025/26 sugar production, reaching 10.3 million metric tons.
Expert Summary
Recent market activity saw a slight increase in sugar futures, influenced by a notable surge in crude oil prices. Despite this short-term movement, the broader market sentiment remains bearish. This is due to strong production forecasts from major sugar-producing nations like Brazil, India, and Thailand, which collectively indicate a potential oversupply in the global market for the upcoming seasons.
