Sugar Prices Decline Amid Global Surplus Expectations

On Wednesday, July NY world sugar #11 (SBN25) closed down -0.16 (-0.88%) while August London ICE white sugar #5 (SWQ25) fell -5.90 (-1.16%).

Market Pressures from Rising Global Production

Sugar prices have come under pressure recently, settling lower due to expectations of a global surplus. Consultant Datagro announced a projected surplus of +1.53 million metric tons (MMT) for the 2025/26 season, marking a recovery from a deficit of -4.67 MMT in 2024/25.

Last week, short covering temporarily boosted sugar prices. NY sugar reached a five-week high on Tuesday, while London sugar hit a two-week high. Earlier this month, NY sugar recorded a three-and-three-quarter-year low, and London sugar dropped to a three-and-three-quarter-month low, affected by higher production forecasts from Brazil.

Brazilian and Indian Production Forecasts

Conab, Brazil’s national agricultural agency, projects an increase of +4.0% year-over-year in Brazil’s sugar production for 2025/26, reaching 45.875 MMT.

Further compounding the bearish trend, the USDA’s Foreign Agricultural Service (FAS) predicted India’s sugar production would rise by +26% year-over-year to 35 MMT, largely due to favorable monsoon rains and expanded sugar acreage. In addition, Brazil’s 2025/26 sugar production was estimated to increase by +2.3% year-over-year to 44.7 MMT.

The favorable outlook for India’s monsoon season is expected to yield a substantial sugar crop. India’s Ministry of Earth Sciences anticipates a rainfall total of 105% of the long-term average this year, with the monsoon season running from June through September.

Impact of Sugar Export Policies

On the negative side, the Indian government announced in January that it would allow its sugar mills to export 1 MMT of sugar this season, reversing previous restrictions imposed in October 2023 to maintain domestic supplies. Last season, India exported only 6.1 MMT, compared to 11.1 MMT in the prior season. Nonetheless, the Indian Sugar Mills Association (ISMA) forecasts a -17.5% decline in India’s sugar production for 2024/25, estimating a production low of 26.4 MMT.

In April, ISMA reported that India’s sugar output from October 1 to April 15 was down -18% from the same period last year. Additionally, India’s Food Secretary indicated in May that the country’s sugar exports for 2024/25 may total only 800,000 MT, well below original expectations.

Regional Production Insights and Global Outlook

Recently, Thailand has also indicated increased sugar production, with the Cane and Sugar Board reporting a +14% year-over-year rise for 2024/25, bringing production to 10.00 MMT. Thailand ranks as the third-largest sugar producer globally and the second-largest exporter.

While some metrics indicate lower global sugar production, which could support prices, Unica’s reports show Brazil’s Center-South sugar production for April decreased by -38.6% year-over-year to 1.58 MMT. Additionally, total sugar output in Brazil’s Center-South fell by 5.3% year-over-year to 40.169 MMT through March.

In March, the ISO raised its global sugar deficit forecast for 2024/25 to -4.88 MMT, while adjusting its global sugar production forecast downward to 175.5 MMT.

Weather Impacts and Future Projections

Last year’s drought and excessive heat in Brazil caused significant damage to sugar crops, particularly in São Paulo, hindering yields. Green Pool Commodity Specialists noted that about 5 MMT of sugar cane may have been lost due to wildfires. Conab has since adjusted its 2024/25 production forecast for Brazil down by -3.4% to 44.118 MMT.

In its bi-annual report released on November 21, the USDA projected a +1.5% rise in global sugar production for 2024/25, reaching a record 186.619 MMT, along with a predicted +1.2% increase in consumption to a record 179.63 MMT.

On the date of publication, Rich Asplund did not hold any positions, directly or indirectly, in the securities mentioned in this article. All information is solely for informational purposes. For further details, please refer to Barchart’s Disclosure Policy.

The views expressed in this article are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.