Key Takeaways
- Global sugar prices surged to three-week highs, driven by expectations of tighter supplies from India.
- India’s decision to allow only 1.5 MMT of sugar exports for the 2025/26 season, lower than anticipated, significantly impacted the market.
- Potential surplus forecasts from traders and production estimates from Brazil, India, and Thailand suggest a bearish outlook for sugar prices in the long term.
- Despite short-term rallies, the overarching trend indicates a balanced to surplus global sugar market for the upcoming seasons.
Sugar Markets React to Shifting Global Supply Dynamics
Current market movements show a notable uptick in sugar prices. The March NY world sugar #11 contract (SBH26) saw a significant gain of +0.47 (+3.25%), while the March London ICE white sugar #5 contract (SWH26) also climbed +12.30 (+2.98%). This rally has pushed sugar prices to three-week highs, largely attributed to revised expectations regarding sugar supplies originating from India.
💡 The Indian government announced that it will permit mills to export 1.5 million metric tons (MMT) of sugar for the 2025/26 season. This figure is notably lower than the previously estimated 2 MMT, creating immediate upward pressure on prices. India had previously implemented an export quota system in the 2022/23 season following production shortfalls due to adverse weather conditions.
Prevailing Bearish Sentiment Amidst Production Forecasts
In contrast to the recent rally, the broader outlook for global sugar supplies has exerted considerable downward pressure on prices over the past month. London sugar recently touched a new 4.75-year nearest-futures low, and New York sugar prices experienced a slump to a 5-year nearest-futures low. These movements were primarily driven by robust sugar output from Brazil and projections of a substantial global sugar surplus.
📊 Sugar trader Czarnikow revised its global sugar surplus estimate for the 2025/26 season upward to 8.7 MMT, an increase of 1.2 MMT from its prior September estimate of 7.5 MMT. This adjustment reinforces concerns about potential oversupply in the international market.
Brazil’s Record Output Expected to Influence Prices
The forecast for record sugar production in Brazil is a key bearish factor for sugar prices. Brazil’s national crop forecasting agency, Conab, has raised its 2025/26 sugar production estimate for the country to 45 MMT, up from a previous forecast of 44.5 MMT. Data from Unica indicates a significant year-on-year increase in Brazil’s Center-South region; sugar output in the latter half of October rose by 16.4% to 2.068 MT. Furthermore, the proportion of sugarcane crushed for sugar in Brazil’s mills during the same period increased slightly to 46.02% from 45.91% in the previous year. Cumulatively, Center-South sugar output through October for the 2025-26 season has climbed 1.6% year-on-year to 38.085 MMT.
📍 In related projections, Datagro forecasted on October 21 that Brazil’s Center-South region would achieve a record sugar production of 44 MMT in the 2026/27 season, representing a 3.9% year-on-year increase.
India’s Production and Export Potential Scrutinized
Signs pointing to a larger sugar crop in India, the world’s second-largest producer, are also contributing to price pressures. The India Sugar Mill Association (ISMA) revised its 2025/26 India sugar production estimate upward to 31 MMT from an earlier forecast of 30 MMT, signifying an 18.8% year-on-year increase. Concurrently, ISMA reduced its estimate for sugar utilization in ethanol production to 3.4 MMT from the July forecast of 5 MMT. This reduction could potentially free up more sugar for export, impacting global supply dynamics.
⚡ The outlook for increased sugar exports from India is generally viewed negatively for prices, especially given the favorable monsoon rains that suggest a robust sugar crop. Reports from India’s Meteorological Department indicated that cumulative monsoon rainfall as of September 30 was running 8% above normal, marking the strongest monsoon in five years. Earlier, on June 2, India’s National Federation of Cooperative Sugar Factories projected a significant 19% year-on-year rise in India’s 2025/26 sugar production to 34.9 MMT, attributing this to increased sugarcane cultivation area. This potential surge follows a substantial 17.5% year-on-year decline in India’s sugar production for the 2024/25 season, which resulted in a five-year low of 26.1 MMT, according to ISMA figures.
Thailand and International Organizations Weigh In
Thailand, the third-largest sugar producer globally, is also expected to see higher sugar output, which is bearish for prices. The Thai Sugar Millers Corp projected on October 1 that Thailand’s 2025/26 sugar crop would increase by 5% year-on-year to 10.5 MMT. This follows a 14% year-on-year increase 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.
📌 In contrast to these supply-side increases, the International Sugar Organization (ISO) had forecasted a global sugar deficit for the 2025/26 season in its August 29 report, projecting this as the sixth consecutive year of deficits. The ISO anticipates a global deficit of -231,000 MT for 2025/26, a reduction from the -4.88 MMT shortfall projected for 2024/25. The ISO also projects that global sugar production for 2025/26 will rise by 3.3% year-on-year to 180.6 MMT, with global sugar consumption increasing by 0.3% year-on-year to 180.8 MMT.
The United States Department of Agriculture (USDA), in its bi-annual report released May 22, projected that global 2025/26 sugar production would reach a record 189.318 MMT, a 4.7% increase year-on-year. Global human sugar consumption was forecast to rise 1.4% year-on-year to a record 177.921 MMT. The USDA also anticipated that 2025/26 global sugar ending stocks would increase by 7.5% year-on-year to 41.188 MMT. Within these projections, the USDA’s Foreign Agricultural Service (FAS) predicted a record 44.7 MMT of sugar production for Brazil in 2025/26, a 2.3% year-on-year increase. FAS also forecast India’s 2025/26 sugar production to jump 25% year-on-year to 35.3 MMT, driven by favorable monsoons and expanded planting acreage. Additionally, FAS predicted a 2% year-on-year increase in Thailand’s 2025/26 sugar production, reaching 10.3 MMT.
Expert Summary
While recent short-term price surges for sugar are noted, the overall market sentiment remains influenced by robust production forecasts from major global suppliers like Brazil and India. The differing projections from organizations like the ISO and USDA highlight the complexity of forecasting global sugar balances, but the prevailing expectations point towards a well-supplied market in the medium to long term.
