Key Takeaways
- Sugar futures closed higher on Thursday, driven by a significant rally in crude oil prices, which influenced ethanol production decisions.
- Recent market pressure has pushed NY sugar to a 4.5-year low and London sugar to a 4.25-year low, attributed to strong output from Brazil.
- Projections indicate robust global sugar supplies, with Brazil, India, and Thailand expected to increase production in upcoming seasons.
- Despite some forecasts for deficits, recent data and projections suggest a potential global sugar surplus for the 2025/26 season.
Market Movements and Crude Oil Influence
March NY world sugar #11 futures (SBH26) saw an increase of +0.19 (+1.26%) on Thursday. Concurrently, December London ICE white sugar #5 futures (SWZ25) closed up by +3.30 (+0.76%). These gains followed a strong upward movement in crude oil prices.
The surge in crude oil prices by over +5% to a two-week high on Thursday positively impacted ethanol prices. This dynamic is significant for sugar markets, as higher ethanol prices can incentivize sugar mills, particularly in Brazil, to redirect a larger portion of their sugarcane crushing capacity towards ethanol production, thereby reducing the available supply of sugar.
Recent Price Pressures and Brazilian Output
Sugar prices have experienced sustained downward pressure over the past seven months. New York sugar futures recently declined to a new nearest-futures low not seen in 4.5 years, while London sugar reached a 4.25-year low earlier this week. These declines are largely attributed to signals of increased sugar output from Brazil.
Data from Unica revealed a notable increase in Brazil’s Center-South sugar production during the second half of September, rising by +10.8% year-over-year to 3.137 million metric tons (MT). Furthermore, the proportion of sugarcane crushed for sugar in Brazil’s Center-South region during the latter half of September increased to 51.17%, up from 47.73% in the same period last year. Cumulatively, through September for the 2025-26 season, Center-South sugar output reached 33.524 MMT, an increase of +0.8% year-over-year.
Global Supply Outlook and Projections
The anticipation of ample global sugar supplies continues to exert downward pressure on prices. Consultant Datagro projected on Tuesday that Brazil’s Center-South sugar production for the 2026/27 season could climb by +3.9% year-over-year, potentially reaching a record 44 MMT.
Further contributing to the outlook for a well-supplied market, BMI Group projected a global sugar surplus of 10.5 MMT for the 2025/26 season last Monday. This was followed by a projection of a 4.1 MMT global sugar surplus for the 2025/25 season from Covrig Analytics on Tuesday.
💡 The outlook for increased sugar exports from India also presents a bearish factor for sugar prices. Abundant monsoon rains have raised expectations for a bumper sugar crop in the country.
📊 As of September 30, India’s Meteorological Department reported cumulative monsoon rainfall at 937.2 mm, which is 8% above normal and signifies the strongest monsoon in five years. This favorable weather is expected to boost sugar production.
📌 In a prior development on June 2, India’s National Federation of Cooperative Sugar Factories projected that the country’s 2025/26 sugar production would surge by +19% year-over-year to 34.9 MMT, attributed to an expansion in planted sugarcane acreage. This follows a significant decrease of -17.5% year-over-year in India’s sugar production for 2024/25, which reached a five-year low of 26.2 MMT, according to the Indian Sugar Mills Association (ISMA).
📍 Another bearish signal for sugar comes from sugar trader Sucden, which suggested that India might divert 4 MMT of sugar for ethanol production in 2025/26. However, this diversion may not be sufficient to absorb the country’s sugar surplus, potentially leading India’s sugar mills to export as much as 4 MMT of sugar, exceeding earlier estimates of 2 MMT. India holds the position of the world’s second-largest sugar producer.
⚡ The forecast for increased sugar production in Thailand is also considered bearish for prices. The Thai Sugar Millers Corp. projected on October 1 that Thailand’s 2025/26 sugar crop will likely increase by +5% year-over-year to 10.5 MMT. This follows a +14% year-over-year rise in Thailand’s 2024/25 sugar production to 10.00 MMT, as reported on May 2 by the Office of the Cane and Sugar Board. Thailand is the third-largest sugar producer and the second-largest exporter globally.
Conflicting Forecasts: Deficit vs. Surplus
In contrast to some of the supply-heavy projections, the International Sugar Organization (ISO) forecasted a global sugar deficit for the 2025/26 season on August 29. This marked the sixth consecutive year of projected deficits. The ISO estimates a global 2025/26 sugar deficit of -231,000 MT, a reduction from the -4.88 MMT shortfall anticipated for 2024/25. The ISO also projects a +3.3% year-over-year increase in global sugar production to 180.6 MMT and a +0.3% year-over-year rise in global sugar consumption to 180.8 MMT for 2025/26.
In its bi-annual report released on May 22, the USDA projected that global 2025/26 sugar production would increase by +4.7% year-over-year to a record 189.318 MMT. Concurrently, global human sugar consumption was expected to rise by +1.4% year-over-year to a record 177.921 MMT for the same period. The USDA also forecast a +7.5% year-over-year increase in 2025/26 global sugar ending stocks, reaching 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-over-year to a record 44.7 MMT. Additionally, FAS forecast India’s 2025/26 sugar production to increase by 25% year-over-year to 35.3 MMT, driven by favorable monsoon rains and expanded sugarcane acreage. The FAS also predicted that Thailand’s 2025/26 sugar production would see a +2% year-over-year increase to 10.3 MMT.
Summary of Insights
The sugar market is currently influenced by competing factors, including fluctuating crude oil prices and robust production forecasts from major global producers. While some organizations anticipate a deficit, recent trends and projections from key bodies like the USDA and Datagro point towards a potentially growing global surplus for the upcoming season.