Quick Summary
- Sugar futures saw a significant upswing on Friday, with March NY sugar (#11) reaching a two-week high and March London sugar (#5) hitting a one-week peak.
- A strengthening Brazilian real likely fueled short-covering in sugar markets, as it discourages Brazilian sugar export sales.
- Recent price declines were attributed to increased sugar production in India and Brazil, with both countries reporting substantial year-over-year output gains.
- Global sugar forecasts from organizations like ISO and Czarnikow now indicate a surplus for the 2025/26 season, a shift from previous deficit predictions.
- Production outlooks for major sugar producers including India, Brazil, and Thailand point towards higher output in the upcoming season.
- Despite bearish production forecasts, India has allowed limited sugar exports for the 2025/26 season, offering some underlying support.
Global Sugar Market Dynamics and Price Movements
Global sugar markets experienced a notable rebound on Friday, with March contracts for both New York’s sugar #11 (SBH26) and London’s white sugar #5 (SWH26) closing higher. The upward trend saw the NY contract reach a two-week high, while the London contract attained a one-week pinnacle. This rally appears to be partly driven by a stronger Brazilian real, which has appreciated against the dollar and reached a one-week high. A stronger local currency for Brazil typically makes its sugar exports less competitive, prompting some traders to cover short positions.
However, the market has faced considerable downward pressure in the preceding week, with sugar prices dipping to three-week lows. This decline was largely spurred by escalating sugar production figures emerging from key global producers, India and Brazil. Reports from the India Sugar Mill Association (ISMA) indicated a substantial 43% year-over-year increase in Indian sugar production for October-November, totaling 4.11 million metric tons (MMT).
📊 Insight: The correlation between currency strength and commodity prices is vital for traders. A strengthening real can signal increased demand for Brazilian assets, but for agricultural exporters like sugar producers, it can reduce the profitability of selling abroad, potentially tightening global supply narratives.
Production Surges in India and Brazil Impact Sugar Prices
Brazil’s outlook for record sugar output continues to weigh on market sentiment. Conab, Brazil’s national crop agency, revised its 2025/26 sugar production forecast upwards to 45 MMT from a prior estimate of 44.5 MMT. Further evidence of increased production comes from Unica, which reported an 8.7% year-over-year rise in sugar output from Brazil’s Center-South region during the first half of November. Cumulative output for the 2025-26 Center-South season through mid-November also saw a 2.1% year-over-year increase, reaching 39.179 MMT.
Adding to the bearish sentiment, the International Sugar Organization (ISO) released a forecast on November 17 predicting a global sugar surplus of 1.625 million metric tons for the 2025-26 season. This projection marks a significant shift from the 2.916 million metric ton deficit anticipated for 2024-25. ISO attributes this change to heightened sugar production in India, Thailand, and Pakistan, contrasting with their earlier August forecast of a smaller deficit for the 2025-26 marketing year.
✅ Tip: Monitoring forecasts from multiple reputable organizations like ISO and Conab provides a more comprehensive understanding of potential market shifts. Discrepancies in their predictions can highlight areas of market uncertainty or differing analytical approaches.
Shifting Global Sugar Supply Forecasts
The International Sugar Organization (ISO) now anticipates a global sugar surplus of 1.625 million metric tons for the 2025-26 marketing year, a notable reversal from previous deficit projections. This surplus is expected to be driven by increased output from major sugar-producing nations, including India, Thailand, and Pakistan. This revised outlook contrasts with earlier forecasts that predicted a supply deficit for the upcoming season.
Sugar trader Czarnikow further bolstered the surplus narrative, increasing its global 2025/26 sugar surplus estimate to 8.7 MMT in a November 5 report. This represents a significant upward revision of 1.2 MMT from their September estimate of 7.5 MMT, underscoring a growing consensus for ample global sugar availability.
💡 Analysis: A shift from a deficit to a surplus forecast can materially impact future pricing strategies. Traders and producers will need to closely watch production figures and demand trends to navigate these evolving supply conditions.
India and Thailand Boost Sugar Production Prospects
The prospects of a larger sugar crop in India, the world’s second-largest producer, are exerting downward pressure on prices. The India Sugar Mill Association (ISMA) recently raised its 2025/26 India sugar production estimate to 31 MMT, an increase from its earlier forecast of 30 MMT and representing an 18.8% year-over-year rise. Furthermore, ISMA has reduced its estimate for sugar allocated to ethanol production to 3.4 MMT from a previous projection of 5 MMT, potentially freeing up more sugar for export.
Favorable monsoon rains in India are contributing to the expectation of a bumper sugar crop. Cumulative monsoon rainfall as of September 30 was 8% above the normal average, marking the strongest monsoon in five years. This weather pattern, coupled with an anticipated increase in planted sugarcane acreage, has led organizations like India’s National Federation of Cooperative Sugar Factories to project a significant 19% year-over-year increase in India’s 2025/26 sugar production, reaching an estimated 34.9 MMT. This follows a period of reduced production in the 2024/25 season.
📌 Fact: Thailand, the world’s third-largest sugar producer and second-largest exporter, also anticipates increased output. The Thai Sugar Millers Corp projected a 5% year-over-year increase in Thailand’s 2025/26 sugar crop to 10.5 MMT, building on a 14% production rise in the 2024/25 season.
USDA Projections Highlight Record Global Sugar Output
Recent projections from the USDA in its bi-annual report released on May 22 paint a picture of record-breaking global sugar production for the 2025/26 season. The USDA forecasts a 4.7% year-over-year increase in global sugar output, reaching an unprecedented 189.318 MMT. Concurrently, human sugar consumption is expected to rise by 1.4% year-over-year to a record 177.921 MMT.
The USDA’s Foreign Agricultural Service (FAS) specifically anticipates a significant uptick in production from Brazil and India. Brazil’s 2025/26 output is predicted to rise by 2.3% year-over-year to a record 44.7 MMT. India’s production is forecasted to surge by 25% year-over-year to 35.3 MMT, largely attributed to favorable monsoon conditions and expanded sugarcane cultivation. Thailand’s production is also expected to see a 2% year-over-year increase to 10.3 MMT.
âš¡ Analysis: With global sugar production projected to hit record levels, and consumption growth lagging, the potential for increased global sugar ending stocks becomes a significant market factor. The USDA forecasts a 7.5% year-over-year climb to 41.188 MMT in these stocks for 2025/26.
Frequently Asked Questions about Global Sugar Markets
What is influencing the recent rise in sugar prices?
The recent surge in sugar prices on Friday was partly influenced by a strengthening Brazilian real. This currency appreciation can discourage export sales by Brazilian sugar producers, leading to some short-covering activity in futures markets.
Why have sugar prices declined recently despite the latest rally?
Prices experienced a retreat in the week prior due to significant increases in sugar production reported from both India and Brazil. Higher output from these major producers typically puts downward pressure on global sugar prices.
What are the key supply-side factors affecting sugar prices in the 2025/26 season?
The primary factors are increased production forecasts from major countries like India, Brazil, and Thailand, alongside weather patterns such as India’s strong monsoon rains. These elements are shifting global supply forecasts from deficits to surpluses.
How do currency movements impact sugar trading?
Currency fluctuations, particularly in countries like Brazil which are major sugar exporters, can significantly influence trading dynamics. A stronger local currency makes exports more expensive for foreign buyers, potentially reducing demand and affecting futures prices.
What is the latest outlook for global sugar supply?
Multiple forecasts, including those from the ISO and Czarnikow, now predict a sugar surplus for the 2025/26 season, a notable shift from earlier expectations of a deficit. The USDA also projects record global production for this period.
Global Sugar Market Outlook
The global sugar market is currently navigating a complex interplay of robust production forecasts and currency market movements. While Friday saw a price recovery driven by a stronger Brazilian real potentially limiting exports, the overarching trend indicated by major agricultural agencies points towards a substantial increase in global sugar supply for the upcoming 2025/26 season.
The anticipated production records in countries like Brazil and India, supported by favorable weather conditions and expanded acreage, are central to this outlook. Traders and industry participants will be closely monitoring how these supply dynamics unfold, alongside shifts in global demand and the continued influence of currency exchange rates on trade flows.
