Global Sugar Prices Decline Amid Surplus Expectations

July NY world sugar #11 (SBN25) has seen a decrease of -0.42 (-2.33%), while August London ICE white sugar #5 (SWQ25) is down -11.30 (-2.24%).

Outlook for a Global Sugar Surplus

Sugar prices are sharply lower today as analysts anticipate a global sugar surplus. Consultant Datagro projected a global sugar surplus of +1.53 MMT for 2025/26, a significant rebound from a deficit of -4.67 MMT in 2024/25. Meanwhile, StoneX estimates an even larger surplus of +3.74 MMT for the same period.

Increasing Production Forecasts

Recent forecasts indicate a rise in global sugar production, negatively impacting prices. On Tuesday, the USDA’s Foreign Agricultural Service (FAS) stated that India’s sugar production for 2025/26 is expected to increase by +26% year-on-year to 35 MMT. This is attributed to favorable monsoon rains and an increase in sugar acreage. Similarly, Brazil’s 2025/26 sugar production is projected to rise by +2.3% year-on-year to 44.7 MMT, as reported by the FAS in April. Conab also forecasts a rise in Brazil’s production to 45.875 MMT, up +4.0% year-on-year.

Expectations of abundant rain in India are contributing to the bearish outlook for sugar prices. The Indian Ministry of Earth Sciences projected an above-normal monsoon this year, with total rainfall forecasted to be 105% of the long-term average. India’s monsoon season runs from June through September.

Export Policies and Local Production

On a cautionary note, Datagro projected on March 12 that Brazil’s Center-South sugar production for 2025/26 would rise +6% to 42.4 MMT. Green Pool Commodity Specialists also indicated that the global sugar market is expected to shift to a surplus of +2.7 MMT in the 2025/26 crop year, reversing a deficit of -3.7 MMT in 2024/25.

Additionally, the Indian government announced on January 20 that it would allow sugar mills to export 1 MMT of sugar this season, lifting some restrictions imposed in 2023. India had limited sugar exports since October 2023 to ensure domestic supply stability. Mills were permitted to export only 6.1 MMT in the 2022/23 season, down from a record 11.1 MMT the previous year. However, the Indian Sugar Mills Association (ISMA) projects that India’s 2024/25 sugar production will decline by -17.5% year-on-year, reaching a five-year low of 26.4 MMT. As of April 17, ISMA reported India’s sugar output from October 1 to April 15 at 25.5 MMT, an -18% decline from last year. India’s Food Secretary Chopra stated on May 1 that sugar exports for 2024/25 may only total 800,000 MT, below earlier estimations.

Regional Production Impacts

In Thailand, another key player in the sugar market, the Office of the Cane and Sugar Board reported a +14% year-on-year increase in sugar production for 2024/25, reaching 10.00 MMT. As the world’s third-largest sugar producer, Thailand’s output impacts the global market.

Despite signs of increased production, some data suggests a potential decline in global sugar supply. On Tuesday, Unica reported that Brazil’s Center-South sugar production for April fell -38.6% year-on-year to 1.58 MMT. Additionally, Unica indicated a cumulative production decrease of 5.3% year-on-year to 40.169 MMT for the 2024/25 season. The Indian Sugar and Bio-energy Manufacturers Association revised its 2024/25 production forecast to 26.4 MMT from an earlier estimate of 27.27 MMT due to lower cane yields.

Global Market Adjustments

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 -4.88 MMT in February. This suggests a tightening market compared to the 1.31 MMT surplus in the 2023/24 season. The ISO also reduced its global sugar production forecast from 175.5 MMT to 174.8 MMT for 2024/25.

Brazil faced crop damage last year due to drought and excessive heat, resulting in fires that harmed sugar production in São Paulo, the country’s top sugar-producing state. Green Pool Commodity Specialists estimated that up to 5 MMT of sugar cane may have been lost. Conab projected a -3.4% year-on-year decrease in Brazil’s sugar production for 2024/25, forecasting it to reach 44.118 MMT due to lower yields.

The USDA’s bi-annual report released on November 21 anticipates a +1.5% increase in global sugar production for 2024/25, reaching a record 186.619 MMT. They expect global sugar consumption to rise by +1.2% year-on-year to 179.63 MMT and project a decline in global ending stocks by -6.1% to 45.427 MMT.

On the date of publication, Rich Asplund did not hold any positions in the securities mentioned in this article. All data is for informational purposes only. Please refer to the Barchart Disclosure Policy for further details.

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