Sugar Prices Decline Amid Global Surplus Expectations
July NY world sugar #11 (SBN25) closed down -0.30 (-1.69%) on Thursday, while August London ICE white sugar #5 (SWQ25) fell -9.60 (-1.93%).
Market Overview
Sugar prices showed a decline on Thursday, staying just above the two-week lows recorded earlier in the week. Anticipations of a global sugar surplus have been a significant factor influencing this downward trend. Last Wednesday, the consultancy Datagro estimated a global sugar surplus of +1.53 million metric tons (MMT) for the 2025/26 production year, a sharp recovery from the -4.67 MMT deficit projected for 2024/25. Meanwhile, StoneX has forecasted an even larger surplus of +3.74 MMT for the same period.
Production Forecasts Impacting Prices
Signs of increased sugar production worldwide are leaning negatively on prices. The USDA’s Foreign Agricultural Service (FAS) indicated on May 6 that India’s sugar output could spike by +26% year-over-year to reach 35 MMT due to favorable monsoon rains and expanded sugar cultivation. Additionally, the FAS previously projected a +2.3% rise for Brazil’s sugar production in 2025/26, increasing from 43.7 MMT to 44.7 MMT. Furthermore, Conab estimates have Brazil’s sugar production for the same period at +4.0% year-over-year, reaching 45.875 MMT.
Conditions for increased rainfall in India could enhance sugar crop yields. The Ministry of Earth Sciences forecasted an above-normal monsoon, predicting total rainfall to be 105% of the long-term average for this year, with the monsoon season spanning from June through September.
Export Policies and Stock Updates
Contributing to bearish sentiment, the Indian government announced on January 20 that it would allow sugar mills to export 1 MMT this season, easing restrictions that had been implemented for the 2023 season. India had limited sugar exports since October 2023 to ensure domestic supply levels. For the 2022/23 season, only 6.1 MMT were permitted for export, compared to a record 11.1 MMT the previous year. However, the Indian Sugar Mills Association (ISMA) anticipates a -17.5% decline in India’s 2024/25 sugar production, predicting a low of 26.2 MMT. Reports indicate that as of May 15, India’s production during the October to May period stood at 25.74 MMT, which is down -17% from last year’s figures. Similarly, India’s Food Secretary announced that the country might only export 800,000 MT of sugar in 2024/25, a decrease from earlier projections of 1 MMT.
Regional Insights from Thailand and Brazil
Thailand’s sugar production outlook also paints a bearish picture for prices. The Office of the Cane and Sugar Board reported on May 2 that sugar production for the 2024/25 season is expected to increase by +14% year-over-year to 10.00 MMT, solidifying Thailand’s position as the third-largest sugar producer and second-largest exporter worldwide.
Potential for Falling Production
In contrast, signs of reduced sugar production elsewhere could offer price support. Unica, Brazil’s sugar industry association, reported a significant -38.6% year-over-year decrease in Center-South sugar production for April, totaling 1.58 MMT. There was a cumulative drop of 5.3% year-over-year in Brazilian sugar output through March. Additionally, the Indian Sugar and Bio-energy Manufacturers Association has revised its sugar production forecast for India to 26.4 MMT, down from an earlier estimate of 27.27 MMT due to declining cane yields.
Global Supply and Demand Dynamics
Supporting a tighter market, the International Sugar Organization (ISO) recently increased its forecast for the global sugar deficit in 2024/25 to a nine-year high of -5.47 MMT, up from a previous estimate of -4.88 MMT. They have also revised down the projected global sugar production for 2024/25 to 174.8 MMT from 175.5 MMT.
Last year’s severe drought and extreme heat in Brazil led to crop damage, especially in São Paulo, affecting as much as 5 MMT of sugar cane. Conab estimates a -3.4% decrease in Brazil’s sugar production for 2024/25 due to these environmental factors.
According to the USDA’s bi-annual report released on November 21, global sugar production for 2024/25 is expected to rise by +1.5% year-over-year to a record 186.619 MMT. At the same time, worldwide sugar consumption is projected to increase by +1.2% year-over-year to a record 179.63 MMT. Ending stocks are forecasted to decline by -6.1% to 45.427 MMT during the same period.
On the date of publication, Rich Asplund did not hold positions in any of the securities mentioned in this article. All information and data are for informational purposes only.
