Sugar Prices Decline Amid Increased Global Production Expectations

Current Market Overview

As of today, July NY world sugar #11 (SBN25) has decreased by -0.11 (-0.65%), while August London ICE white sugar #5 (SWQ25) is down -3.80 (-0.80%).

Production Outlook Influences Prices

Sugar prices are dropping due to anticipated higher production in India, the second-largest producer globally. The National Federation of Cooperative Sugar Factories projects India’s 2025/26 sugar output to rise by 19% year-over-year (y/y) to 35 million metric tons (MMT), attributed to larger planted cane acreage.

Over the past two months, sugar prices have consistently fallen. NY sugar recently hit a 3.75-year low, and London sugar fell to a 4.5-month low. The expectation of a global sugar surplus has negatively impacted prices. On May 22, the USDA projected global sugar production in 2025/26 to increase by 4.7% y/y to a record 189.318 MMT, with a surplus of 41.188 MMT, up 7.5% y/y.

Impacts of Global Production Increases

Higher global sugar production forecasts are bearish for prices. The USDA’s Foreign Agricultural Service has predicted Brazil’s 2025/26 sugar output will rise 2.3% y/y to a record 44.7 MMT. India’s output is projected to increase by 25% y/y, reaching 35.3 MMT due to favorable weather conditions and expanded acreage. Additionally, Thailand expects a 2% y/y increase to 10.3 MMT in sugar production.

India’s outlook for abundant rain could promote a strong sugar crop. The Ministry of Earth Sciences predicts the monsoon season will yield rainfall at 105% of the long-term average from June to September.

Export Policies and Future Production Concerns

The Indian government recently announced it would permit sugar mills to export 1 MMT this season, easing the restrictions placed earlier in 2023. Export limitations since October 2023 have kept domestic supplies adequate. During the 2022/23 season, India allowed only 6.1 MMT of sugar exports, down from a record 11.1 MMT in the prior season. The Indian Sugar Mills Association expects production for 2024/25 to decline by 17.5% y/y to a five-year low of 26.2 MMT and reported a 17% decrease in production from October 1 to May 15 compared to last year. Exports for this period may total only 800,000 MT, lower than prior projections of 1 MMT.

Regional Production Highlights

In Thailand, an increase in sugar production is noted, with a 14% y/y rise to 10.00 MMT for the 2024/25 season. Thailand is the third-largest sugar producer and the second-largest exporter globally.

In Brazil, reduced sugar production supports higher prices. Unica reported a 6.8% y/y decrease in sugar output in early May and a cumulative reduction of 22.7% y/y through mid-May. Last month, projections indicated a drop in Brazil’s sugar production for 2024/25 by 3.4% y/y to 44.118 MMT due to adverse weather conditions.

Global Production Forecast Adjustments

The USDA, in its biannual report released on May 22, forecasted that global sugar production would reach a record of 189.318 MMT in 2025/26, with human sugar consumption also expected to increase by 1.4% to a record 177.921 MMT. Ending stocks for the same period are projected to rise by 7.5% y/y to 41.188 MMT.

On the date of publication, Rich Asplund did not hold any positions in the securities mentioned. All information here is solely for informational purposes. For more details, view the Barchart Disclosure Policy here.

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