Sugar Prices Rise as Brazil Production Declines
On Friday, July NY world sugar #11 (SBN25) closed up +0.05 (+0.29%), while August London ICE white sugar #5 (SWQ25) increased by +2.50 (+0.53%).
Market Influences: Brazil’s Production and Speculation
Sugar prices experienced a second consecutive day of gains, driven largely by fund short-covering. This was prompted by a report indicating a decrease in Brazil’s sugar production. Unica reported that Brazil’s 2025/26 Center-South sugar output for early May declined -6.8% year-over-year (y/y) to 2.408 million metric tons (MMT), with total production through mid-May down -22.7% y/y to 3.989 MMT.
For the last two months, sugar prices have decreased, with NY sugar hitting a nearly four-year low and London sugar dropping to a four-month low. The forecast of a global sugar surplus has pressured prices. The USDA’s recent biannual report projected a 4.7% year-over-year increase in 2025/26 global sugar production to a record 189.318 MMT, resulting in a surplus of 41.188 MMT—up 7.5% y/y.
Global Production Forecasts Impact Prices
Expectations of increased global output are bearish for prices. The USDA’s Foreign Agricultural Service (FAS) anticipates Brazil’s production will rise +2.3% y/y to a record 44.7 MMT. India’s output is also projected to climb +25% y/y to 35.3 MMT, thanks to favorable monsoon rains and expanded sugar acreage. Furthermore, Thailand’s sugar production is expected to grow +2% y/y to 10.3 MMT.
The outlook for abundant rainfall in India, projected to reach 105% of the long-term average, could enhance sugar crop yields during the monsoon season from June through September. On January 20, the Indian government permitted sugar mills to export 1 MMT this season, easing previous restrictions to ensure adequate domestic supplies. In the previous season, exports totaled 6.1 MMT, down from a record 11.1 MMT the prior year. However, the ISMA forecasts a -17.5% decline in India’s 2024/25 sugar production, estimating it at a five-year low of 26.2 MMT.
Challenges and Opportunities in Production
Recently, the Indian government indicated that sugar exports for 2024/25 may only reach 800,000 MT, a reduction from earlier estimates of 1 MMT. Meanwhile, Thailand’s 2024/25 sugar production is projected to increase by +14% y/y to 10.00 MMT, reinforcing its position as the third-largest sugar producer globally.
On the other hand, signs of lower global production could support prices. Unica recently stated that Brazil’s sugar output through March fell by 5.3% y/y to 40.169 MMT. Additionally, the ISMA reduced its production forecast for India from 27.27 MMT to 26.4 MMT due to anticipated lower cane yields.
Global Sugar Market Trends
The International Sugar Organization (ISO) has adjusted its global sugar deficit forecast for 2024/25 to a nine-year high of -5.47 MMT, indicating a tightening market compared to the previous year’s surplus of 1.31 MMT. The ISO also revised its global sugar production forecast down to 174.8 MMT from 175.5 MMT.
Last year’s drought and excessive heat caused fires in Brazil, damaging crops in the key production state of Sao Paulo. Green Pool Commodity Specialists estimated that up to 5 MMT of sugar cane was lost due to these fires. Conab, Brazil’s government crop forecasting agency, has projected a -3.4% y/y decrease in sugar production to 44.118 MMT for 2024/25 due to poor yields.
The USDA’s latest report reiterated that global sugar production for 2025/26 will increase by +4.7% y/y to a record 189.318 MMT, while human sugar consumption is also expected to rise +1.4% y/y to a record 177.921 MMT, with ending stocks increasing by +7.5% y/y to 41.188 MMT.
On the date of publication, Rich Asplund did not hold positions in any of the mentioned securities. All information is intended for informational purposes only. Please refer to the Barchart Disclosure Policy for more details.
