Sugar Prices Decline Amid Rising Global Production Expectations

July NY world sugar #11 (SBN25) is down -0.33 (-1.86%) today, while August London ICE white sugar #5 (SWQ25) has dropped -10.80 (-2.17%).

Current Market Overview

Sugar prices are trending lower, stabilizing just above Tuesday’s two-week lows. Over the last week, expectations of a global sugar surplus have negatively impacted sugar prices. Last Wednesday, consultant Datagro projected a 2025/26 global sugar surplus of +1.53 MMT, recovering sharply from a projected deficit of -4.67 MMT for 2024/25. In contrast, StoneX forecasts a 2025/26 global sugar surplus of +3.74 MMT.

Factors Impacting Prices

Rising global sugar output has put downward pressure on prices. On May 6, the USDA’s Foreign Agricultural Service (FAS) predicted that India’s sugar production for 2025/26 will increase by +26% year-on-year to reach 35 MMT, driven by favorable monsoon rains and expanded sugar acreage. Additionally, Brazil’s sugar production for 2025/26 is estimated to rise by +2.3% year-on-year to 44.7 MMT from 43.7 MMT in the previous season, according to a forecast from the USDA’s FAS on April 23. On April 29, Conab projected Brazilian sugar production to reach +45.875 MMT for the same period.

The outlook for abundant rain in India further undermines sugar prices. On April 15, India’s Ministry of Earth Sciences forecasted an above-normal monsoon this year, estimating total rainfall at 105% of the long-term average. The monsoon season in India runs from June to September.

Export Dynamics and Domestic Production

Additionally, bearish sentiment was fueled when the Indian government announced on January 20 that it would allow sugar mills to export 1 MMT of sugar this season. This decision eases restrictions imposed in late 2023, where exports were limited to maintain domestic supply levels. In the 2022/23 season, India allowed mills to export only 6.1 MMT of sugar, significantly lower than the record 11.1 MMT permitted in the previous season. However, the Indian Sugar Mills Association (ISMA) projects that India’s sugar production for 2024/25 may see a decline of -17.5% year-on-year, reaching a five-year low of 26.2 MMT. The ISMA also reported that from October 1 to May 15, India produced 25.74 MMT sugar, down -17% from the same timeframe last year. Furthermore, Indian Food Secretary Chopra indicated on May 1 that 2024/25 sugar exports might only total 800,000 MT, below previous expectations of 1 MMT.

Global Production Trends

The situation in Thailand also adds to negative price pressures. On May 2, Thailand’s Office of the Cane and Sugar Board reported a +14% year-on-year rise in sugar production for 2024/25, amounting to 10.00 MMT. As the world’s third-largest sugar producer and the second-largest exporter, Thailand’s increase in output will contribute to a more competitive market.

Signs of Support for Prices

Despite the large production forecasts, there are signs that lower global sugar production could support prices. Last Tuesday, Unica reported a -38.6% year-on-year drop in Brazil’s 2025/26 Center-South sugar production for April, totaling only 1.58 MMT. On April 14, cumulative output for 2024/25 showed a decline of 5.3% year-on-year to 40.169 MMT through March. The Indian Sugar and Bio-energy Manufacturers Association revised its 2024/25 forecast down to 26.4 MMT from an earlier estimate of 27.27 MMT, citing insufficient cane yields.

Furthermore, the International Sugar Organization (ISO) recently raised its 2024/25 global sugar deficit forecast to a nine-year high of -5.47 MMT, up from a previous estimate of -4.88 MMT. This indicates a tightening market compared to the 2023/24 global surplus of 1.31 MMT. The ISO also reduced its global sugar production forecast for 2024/25 to 174.8 MMT from 175.5 MMT.

Drought and extreme heat in Brazil last year led to fires that significantly harmed sugar crops, especially in the country’s largest sugar-producing state, São Paulo. Green Pool Commodity Specialists noted potential losses of up to 5 MMT of sugar cane due to these fires. Additionally, Conab recently projected a -3.4% year-on-year decrease in Brazil’s sugar production for 2024/25, now estimated at 44.118 MMT, attributing the decline to poor sugarcane yields resulting from adverse weather conditions.

The USDA’s bi-annual report released on November 21 projected that global sugar production for 2024/25 would rise by +1.5% year-on-year to a record 186.619 MMT. The report also anticipates global human sugar consumption to increase by +1.2% year-on-year to a record 179.63 MMT. Additionally, ending stocks for 2024/25 are predicted to decline by -6.1% year-on-year to 45.427 MMT.

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more details, please view the Barchart Disclosure Policy.

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