Global Sugar Prices Drop Amid Surplus Predictions and Weather Trends

Today, July NY world sugar #11 (SBN25) decreased by -0.18 (-1.03%), while August London ICE white sugar #5 (SWQ25) fell by -3.10 (-0.63%).

Pressure on Sugar Prices

Sugar prices are currently under pressure, reaching their lowest point in a week and a half. Recent projections of a global sugar surplus have contributed to this decline. Consultant Datagro recently forecasted a surplus of +1.53 million metric tons (MMT) for the 2025/26 sugar year, a significant recovery from a deficit of -4.67 MMT expected for 2024/25. StoneX has an even more optimistic view, predicting a surplus of +3.74 MMT.

Factors Impacting Production

Anticipation of higher global sugar production negatively influences prices. The USDA’s Foreign Agricultural Service (FAS) predicted a +26% year-on-year increase in India’s 2025/26 sugar production to 35 MMT, due to favorable monsoon conditions and increased acreage. Additionally, the FAS noted that Brazil’s sugar production could rise +2.3% year-on-year to 44.7 MMT in the same period, with Conab forecasting a +4.0% increase to 45.875 MMT.

India’s Monsoon and Export Outlook

The forecast for abundant rainfall in India further supports expectations of a bumper crop. India’s Ministry of Earth Sciences anticipates above-average monsoons, predicting total rainfall at 105% of the long-term average from June to September. In a recent development, the Indian government announced that sugar mills could export 1 MMT this season, easing the stringent export restrictions imposed last year. Previously, India had limited exports to just 6.1 MMT for the 2022/23 season, down from a record 11.1 MMT the year before. However, the Indian Sugar Mills Association (ISMA) has projected a -17.5% decline in production for 2024/25, dropping to a five-year low of 26.2 MMT. As of May 15, sugar production from October 1 to May was reported at 25.74 MMT, which is 17% lower than the previous year.

Global Competition from Thailand

In addition to India, Thailand’s sugar production also poses a challenge for prices. Thailand’s Office of the Cane and Sugar Board reported an expected +14% year-on-year increase in 2024/25 sugar production to 10.00 MMT, solidifying its position as the third-largest sugar producer and second-largest exporter globally.

Supporting Factors for Sugar Prices

While higher production forecasts weigh on prices, signs of reduced global sugar production can provide some support. Unica reported a -38.6% drop in Brazil’s Center-South sugar production for April year-on-year, totaling 1.58 MMT. Cumulative sugar output for Brazil through March decreased by 5.3% year-on-year to 40.169 MMT.

International Sugar Outlook

The International Sugar Organization (ISO) recently raised its projection for a global sugar deficit in 2024/25 to a nine-year high of -5.47 MMT, compared to a surplus of 1.31 MMT for 2023/24. Additionally, the ISO cut its 2024/25 global production forecast to 174.8 MMT, down from 175.5 MMT previously.

Weather’s Impact on Brazil’s Sugar Yields

Last year’s drought and excessive heat adversely affected sugar crops in Brazil’s top-producing state of Sao Paulo, with Green Pool Commodity Specialists estimating that as much as 5 MMT of sugar cane may have been lost due to fires. In response to this, Conab projected a -3.4% decrease in Brazil’s sugar production for 2024/25 to 44.118 MMT, attributing this to lower yields from ongoing adverse weather conditions.

Future Projections

The USDA’s bi-annual report, published on November 21, anticipates that global sugar production will rise by +1.5% year-on-year to a record 186.619 MMT for 2024/25. Concurrently, human sugar consumption is expected to increase by +1.2% year-on-year to a record 179.63 MMT. The USDA also projects a decline in global ending stocks by -6.1% year-on-year to 45.427 MMT.

On the date of publication, Rich Asplund did not hold direct or indirect positions in any securities mentioned in this article. All information is for informational purposes only. For more details, please view the Barchart Disclosure Policy here.

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