Key Takeaways
- Global sugar futures experienced a mild uptick, influenced by a stronger Brazilian real and fund short covering.
- Concerns over ample global sugar supplies due to high production in Brazil, India, and Thailand are exerting downward pressure on prices.
- Despite some projections of a global deficit, current market sentiment is bearish, driven by abundant supply forecasts.
Sugar Futures See Slight Recovery Amidst Supply Concerns
March NY world sugar #11 futures are currently trading higher, with a gain of +0.11 (+0.77%). Similarly, December London ICE white sugar #5 futures show an increase of +1.70 (+0.41%).
💡 Sugar prices have managed to recover from earlier losses today. This upward movement is attributed to a strengthening Brazilian real, which has prompted some speculative fund short covering in the sugar futures market. The real reached a two-and-a-half-week high against the US dollar, making it less attractive for Brazilian sugar producers to engage in export sales.
Brazil’s Abundant Sugar Output Pressuring Prices
Sugar prices have faced significant pressure in recent weeks, even reaching 4.75-year lows for the nearest futures contracts. This decline is primarily driven by increased sugar production in Brazil and expectations of a global sugar surplus.
📊 Unica reported on October 16th that Brazil’s Center-South sugar output for the latter half of September saw a substantial year-over-year increase of 10.8%, reaching 3.137 million metric tons (MT). Furthermore, the proportion of sugarcane crushed for sugar production by Brazilian mills in the same period rose to 51.17%, up from 47.73% compared to the previous year. Cumulatively, Center-South sugar output for the 2025-26 season through September increased by 0.8% year-over-year to 33.524 million metric tons (MMT).
✅ Adding to the bearish outlook, consultant Datagro projected on October 10th that Brazil’s Center-South sugar production for the 2026/27 season is expected to climb by 3.9% year-over-year, potentially reaching a record 44 MMT.
Global Supply Outlook Weighs on Sugar Market
The anticipation of robust global sugar supplies continues to be a significant factor weighing down prices. BMI Group projected on October 13th a global sugar surplus of 10.5 MMT for the 2025/26 season.
📍 Concurrent with this, Covrig Analytics projected on October 7th a global sugar surplus of 4.1 MMT for the 2025/26 season.
India and Thailand Poised for Increased Sugar Production
The forecast for higher sugar exports from India also presents a challenge for sugar prices. Abundant monsoon rains have created conditions for a potentially bumper sugar crop in the country.
⚡ On September 30th, India’s Meteorological Department reported cumulative monsoon rainfall of 937.2 mm, which is 8% above normal and marks the strongest monsoon in five years. This favorable weather follows a projected significant increase in India’s sugar production for the 2025/26 season. On June 2nd, India’s National Federation of Cooperative Sugar Factories projected a 19% year-over-year increase in sugar production to 34.9 MMT, citing larger sugarcane acreage. This comes after a substantial decline of 17.5% in India’s sugar production for the 2024/25 season, which hit a five-year low of 26.2 MMT, according to the Indian Sugar Mills Association (ISMA).
💡 Another bearish development for sugar prices stems from sugar trader Sucden’s recent assertion. Sucden suggests that India may divert only 4 MMT of sugar for ethanol production in the 2025/26 season. This amount is considered insufficient to alleviate the country’s sugar surplus, potentially prompting Indian sugar mills to export as much as 4 MMT of sugar, exceeding earlier expectations of 2 MMT. India holds the position of the world’s second-largest sugar producer.
The outlook for increased sugar production in Thailand also contributes to bearish price sentiment. The Thai Sugar Millers Corp projected on October 1st that Thailand’s 2025/26 sugar crop will 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 Thailand’s Office of the Cane and Sugar Board on May 2nd. Thailand is recognized as the world’s third-largest sugar producer and the second-largest exporter.
Conflicting Projections on Global Sugar Balance
In contrast to some bearish outlooks, the International Sugar Organization (ISO) forecasted a global sugar deficit for the 2025/26 season on August 29th. This marks the sixth consecutive year of projected deficits. The ISO projects a global deficit of -231,000 MT for 2025/26, a considerable improvement from the -4.88 MMT shortfall anticipated for 2024/25. The ISO also projects that global sugar production will rise by 3.3% year-over-year to 180.6 MMT, while global sugar consumption is expected to increase by 0.3% year-over-year to 180.8 MMT in 2025/26.
The United States Department of Agriculture (USDA), in its bi-annual report released on May 22nd, offered a more bullish perspective. The USDA projected that global 2025/26 sugar production would climb by 4.7% year-over-year to a record 189.318 MMT. Concurrently, global human sugar consumption was expected to increase by 1.4% year-over-year to a record 177.921 MMT in 2025/26. The USDA also forecast that global sugar ending stocks would rise by 7.5% year-over-year to 41.188 MMT.
The USDA’s Foreign Agricultural Service (FAS) further predicted that Brazil’s 2025/26 sugar production would increase by 2.3% year-over-year to a record 44.7 MMT. FAS also anticipated India’s 2025/26 sugar production to rise by 25% year-over-year to 35.3 MMT, boosted by favorable monsoon rains and increased sugar acreage. Additionally, FAS predicted that Thailand’s 2025/26 sugar production will experience a 2% year-over-year increase to 10.3 MMT.
Expert Summary
Sugar futures are showing a modest rise, driven by currency movements and speculative trading. However, the overarching market sentiment remains cautious due to widespread expectations of strong global sugar production from key exporting nations like Brazil, India, and Thailand.
While some organizations foresee a global deficit, prevailing supply forecasts and production increases in major producing countries suggest continued price pressure for sugar.