Sugar Prices Rise Amid Brazil’s Production Decline

On Thursday, July NY world sugar #11 (SBN25) increased by +0.10 (+0.59%), while August London ICE white sugar #5 (SWQ25) rose by +2.20 (+0.47%).

Sugar prices recovered from early losses due to short covering linked to reduced sugar output in Brazil. Unica reported a 6.8% year-over-year decline in Brazil’s 2025/26 Center-South sugar production for early May, totaling 2.408 MMT. Cumulatively, production is down 22.7% year-over-year, with 3.989 MMT reported through mid-May.

Previously, sugar prices had declined over the past two months, with NY sugar hitting a 3.75-year low on Thursday and London sugar reaching a 4.25-month low. Expectations for a global sugar surplus had pressured prices. The USDA’s biannual report projected a 4.7% year-over-year increase in global sugar production for 2025/26, reaching a record 189.318 million metric tons (MMT), resulting in a surplus of 41.188 MMT, up 7.5% from the previous year.

Increased global sugar output forecasts negatively impact prices. The USDA’s Foreign Agricultural Service predicted a 2.3% year-over-year rise in Brazil’s sugar production for 2025/26 to 44.7 MMT. Additionally, India’s production is expected to increase by 25% year-over-year to 35.3 MMT due to favorable monsoon conditions and expanded sugar acreage. Thailand’s production is also projected to rise by 2% year-over-year to 10.3 MMT.

Abundant rain forecasts in India, which could boost sugar production, further depress prices. India’s Ministry of Earth Sciences expects this year’s monsoon to deliver 105% of the long-term average from June through September.

Moreover, the Indian government announced on January 20 it would permit sugar mills to export 1 MMT this season, easing previous restrictions. Since October 2023, sugar exports had been limited to maintain domestic supplies. India exported 6.1 MMT in the 2022/23 season, having allowed a record 11.1 MMT in the prior year. However, the ISMA now expects India’s 2024/25 sugar production to fall by 17.5% year-over-year to a five-year low of 26.2 MMT. Production from October 1 to May 15 reached 25.74 MMT, down 17% from last year.

Conversely, Thailand’s sugar production outlook adds bearish pressure. The country’s Office of Cane and Sugar Board reported a 14% increase to 10.00 MMT for the 2024/25 season. Thailand ranks as the world’s third-largest sugar producer and the second-largest exporter.

Signs of lower global sugar output can support prices. Unica previously indicated a 5.3% year-over-year decrease in Brazil’s cumulative sugar output through March, totaling 40.169 MMT. Furthermore, the Indian Sugar and Bio-energy Manufacturers Association reduced its 2024/25 production forecast to 26.4 MMT, down from January’s estimate of 27.27 MMT, due to lower cane yields.

The International Sugar Organization reported on May 15 a revised global sugar deficit forecast of -5.47 MMT for 2024/25, the highest in nine years, contrasting with a prior estimate of -4.88 MMT. It also adjusted the global production forecast down to 174.8 MMT from 175.5 MMT in February.

Last year’s drought and excessive heat caused fires in Brazil’s top sugar-producing state of Sao Paulo, damaging crops significantly. Green Pool Commodity Specialists noted a potential loss of 5 MMT of sugar cane due to these fires. Conab projected a 3.4% year-over-year drop in Brazil’s 2024/25 sugar production to 44.118 MMT, linked to lower sugarcane yields.

In its recent report, the USDA also indicated a projected increase in global sugar consumption by 1.4% year-over-year for 2025/26, reaching a record 177.921 MMT. Moreover, it forecast that global ending stocks would increase by 7.5% to 41.188 MMT for the same period.

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 in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.