Mixed Results for Sugar Prices Amid Global Production Shifts

On Tuesday, July NY world sugar #11 (SBN25) closed down -0.03 (-0.17%), while August London ICE white sugar #5 (SWQ25) increased by +4.10 (+0.84%). Sugar prices fell from early gains, ending the day mixed. The drop in NY sugar futures was attributed to long liquidation following a decrease in the Brazilian real (^USDBRL), which fell to a two-week low against the dollar. A weakened real typically boosts export selling among Brazil’s sugar producers.

Recent Production Reports Impacting Prices

Last Friday, July NY sugar reached a 3-3/4-year low, and London sugar recorded a two-week low amid expectations of higher sugar production in Brazil. A report from Unica, released last Wednesday, indicated that Brazil’s Center-South sugar production for the first half of April grew by +1.3% year-over-year to 731,000 MT. Additionally, the report marked the beginning of data for the 2025/26 season.

On the same day, Conab projected a +4.0% year-on-year increase in Brazil’s 2025/26 sugar production, estimating output at 45.875 MMT. In a related finding, Bloomberg indicated that Louis Dreyfus was the only trader delivering raw sugar to settle the NY May sugar futures that expired on Wednesday. Approximately 1.5 MMT of sugar was delivered, marking the fifth-largest settlement for the contract in the past five years, a sign of declining demand.

Global Production Trends Feeding Market Concerns

The outlook for increased global sugar output also presents challenges for pricing. The USDA’s Foreign Agricultural Service (FAS) reported an anticipated +26% year-on-year increase in India’s 2025/26 sugar production, predicting it would rise to 35 MMT, thanks to favorable rainfall and expanded sugar acreage. Previously, on April 23, the USDA’s FAS had forecast Brazil’s sugar output for 2025/26 to climb +2.3% year-on-year to 44.7 MMT, up from 43.7 MMT the previous season.

Concerns about abundant rainfall in India, expected to enhance sugar yields, are putting additional pressure on sugar prices. India’s Ministry of Earth Sciences recently predicted above-normal rainfall this year, estimating total precipitation at 105% of the long-term average during the monsoon season from June to September.

Forecasts Indicate Market Surplus

On the bearish side, consultant Datagro projected a +6% year-on-year increase in Brazil’s 2025/26 Center-South sugar production to 42.4 MMT. Similarly, Green Pool Commodity Specialists forecast a shift to a surplus in the global sugar market, predicting an excess of +2.7 MMT for the 2025/26 crop year, a reversal from a projected deficit of -3.7 MMT for 2024/25.

The Indian government has eased export restrictions, allowing sugar mills to export 1 MMT this season after previously restricting exports to maintain domestic supplies. For the 2022/23 season, India allowed only 6.1 MMT of sugar exports, following a peak of 11.1 MMT in the prior season. However, reports suggest that India’s sugar production could decline -17.5% year-on-year in 2024/25, hitting a five-year low of 26.4 MMT.

Regional Insights and Future Projections

Positive signs in Thailand’s production could further adversely affect sugar prices. Last Friday, Thailand’s Office of the Cane and Sugar Board reported a +14% year-on-year increase in sugar production for the 2024/25 season, reaching 10.00 MMT, solidifying Thailand’s position as the world’s third-largest sugar producer.

On the flip side, potential signs of reduced global sugar production could provide support for prices. Unica reported that Brazil’s cumulative sugar output through March for the 2024/25 season decreased by -5.3% year-on-year to 40.169 MMT. Additionally, the Indian Sugar and Bio-energy Manufacturers Association revised its production forecast down to 26.4 MMT from the earlier estimate of 27.27 MMT due to lower cane yields.

Furthermore, the International Sugar Organization (ISO) upgraded its forecast for a global sugar deficit in 2024/25 to -4.88 MMT—up from a previous estimate of -2.51 MMT—indicating a tightening market compared to the 1.31 MMT surplus noted for the 2023/24 season. The ISO also adjusted its global sugar production forecast down to 175.5 MMT from an earlier estimate of 179.1 MMT.

Drought and heat last year led to fires in Brazil’s key sugar-producing region, damaging crops. Green Pool Commodity Specialists estimated that as much as 5 MMT of sugar cane could have been lost due to these fires. Recently, Conab projected a -3.4% year-on-year decrease in Brazil’s sugar production for the 2024/25 season, estimating it at 44.118 MMT, attributing this decline to lower sugarcane yields from drought conditions.

In its biannual report released November 21, the USDA projected a +1.5% year-on-year increase in global sugar production, forecasting it to reach a record 186.619 MMT. It also anticipated global human sugar consumption would increase +1.2% year-on-year to 179.63 MMT, alongside a projected decline of -6.1% year-on-year in global sugar ending stocks to 45.427 MMT.

On the date of publication, Rich Asplund did not hold positions in any securities mentioned in this article. The information provided is for informational purposes only. For further details, please refer to Barchart’s Disclosure Policy.

More news from Barchart

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.