Sugar Prices Rise Amid Concerns Over Global Production
As of today, July NY world sugar #11 (SBN25) increased by +0.13 (+0.76%), and August London ICE white sugar #5 (SWQ25) rose by +4.00 (+0.84%).
Production Forecasts Impacting Prices
Sugar prices are climbing for a second consecutive day, driven by fund short-covering and positive carryover from Thursday’s report. Unica indicated that Brazil’s Center-South sugar production for May 2025/26 fell by -6.8% year-over-year (y/y) to 2.408 million metric tons (MMT), with cumulative output down -22.7% y/y to 3.989 MMT.
Recent Market Trends
Over the past two months, sugar prices have generally declined. NY sugar hit a 3-3/4 year low last Thursday, while London sugar fell to a 4-1/4 month low. Expectations of a global sugar surplus are pressuring prices. The USDA projected a +4.7% y/y increase in global sugar production for 2025/26, reaching a record 189.318 MMT, with a surplus of 41.188 MMT, up 7.5% y/y.
Global Production Increases
Brazil’s production is expected to rise +2.3% y/y, hitting a record 44.7 MMT. Additionally, India’s production is projected to increase by +25% y/y to 35.3 MMT, due to favorable monsoon conditions and more acreage. Thailand’s output is also anticipated to grow, rising +2% y/y to 10.3 MMT.
Indian Sugar Crop Prospects
Optimistic forecasts about India’s monsoon, which is expected to bring 105% of long-term average rainfall, could support a bumper sugar crop this season, running from June to September. On January 20, the Indian government lifted restrictions on sugar exports, allowing 1 MMT for this season after limiting exports since October 2023.
Production Adjustments in India
Despite these projections, the ISMA forecasts India’s sugar production may drop -17.5% y/y to a five-year low of 26.2 MMT for 2024/25. From October 1 to mid-May, India produced 25.74 MMT, down -17% y/y compared to the previous year. Furthermore, the Indian Food Secretary recently revised expected exports for 2024/25 downward to 800,000 MT, below prior estimates.
Thailand’s Rising Production and Global Context
In Thailand, the Office of the Cane and Sugar Board confirmed a +14% y/y rise in sugar production to 10.00 MMT for 2024/25. As the world’s third-largest sugar producer, Thailand’s increases further pressure sugar prices globally.
Concerns About Lower Global Output
Conversely, signs of reduced production can be supportive for prices. Unica noted a -5.3% y/y decline in cumulative Brazilian sugar output through March to 40.169 MMT. The ISMA lowered its forecast for India’s 2024/25 production, citing reduced cane yields.
Projected Global Surplus and Market Conditions
The International Sugar Organization (ISO) reported an anticipated global sugar deficit of -5.47 MMT for 2024/25, a nine-year high, while also adjusting global production estimates down to 174.8 MMT.
Brazil’s Sugar Production Affected by Environmental Factors
Environmental issues like drought and heat have damaged sugar crops in Brazil’s São Paulo state, leading to losses estimated at 5 MMT. The government agency Conab projected a -3.4% y/y decrease in Brazil’s sugar production to 44.118 MMT for 2024/25, attributing it to these adverse conditions.
Lastly, the USDA’s biannual report forecasts global sugar production to increase +4.7% y/y to 189.318 MMT for 2025/26, with consumption also projected to rise +1.4% y/y to a record 177.921 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 are solely for informational purposes.
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