Sugar Prices Decline Amid Global Surplus Expectations

On Friday, July NY world sugar #11 (SBN25) closed down -0.15 (-0.85%), while August London ICE white sugar #5 (SWQ25) declined -2.90 (-0.59%).

Market Trends Indicate Growing Surplus

Sugar prices fell to one-week lows driven by expectations of a global sugar surplus. According to consultant Datagro, a surplus of +1.53 million metric tons (MMT) is projected for the 2025/26 season, recovering sharply from a projected deficit of -4.67 MMT in 2024/25. StoneX provides a more optimistic estimate, forecasting a surplus of +3.74 MMT for the same period.

Production Forecasts Impact Prices

Last Tuesday, the USDA’s Foreign Agricultural Service (FAS) revealed that India’s 2025/26 sugar production is expected to increase by +26% year-over-year to 35 MMT. This surge is attributed to favorable monsoon rains and expanded sugar acreage. In Brazil, the USDA forecasts a +2.3% year-over-year rise in sugar production for 2025/26, expecting it to reach 44.7 MMT, up from 43.7 MMT previously. Additionally, Conab projects Brazilian sugar production will rise by +4.0% to 45.875 MMT.

Moreover, abundant rainfall in India may result in a bumper crop. The Indian Ministry of Earth Sciences has projected this year’s monsoon to be above normal, with total rainfall anticipated to reach 105% of the long-term average. The monsoon season extends from June to September.

Export Concerns Influence Supply Outlook

On January 20, the Indian government announced it would permit sugar mills to export 1 MMT this season, loosening the restrictions imposed in 2023. Previously, to maintain domestic supplies, India limited exports to only 6.1 MMT for the 2022/23 season, down from a record high of 11.1 MMT. However, the Indian Sugar Mills Association (ISMA) estimates that sugar production for 2024/25 will drop by -17.5% year-over-year to 26.2 MMT. For the period from October 1 to May 15, ISMA reported that India’s sugar production was 25.74 MMT, reflecting a decrease of -17% compared to the prior year. Furthermore, Indian Food Secretary Chopra indicated that the country may only export 800,000 MT of sugar in 2024/25, less than the previously expected 1 MMT.

Global Production Trends and Their Implications

In Thailand, sugar production forecasts also lean bearish. On May 2, the Office of the Cane and Sugar Board reported a +14% year-over-year increase in sugar production for 2024/25, reaching 10.00 MMT. This news is particularly impactful, as Thailand ranks as the world’s third-largest sugar producer and the second-largest exporter.

Conversely, not all reports indicate an oversupply. On Tuesday, Unica reported a significant decline in Brazil’s 2025/26 Center-South sugar production for April, which fell -38.6% year-over-year to 1.58 MMT. The cumulative sugar output through March for the 2024/25 season also decreased by -5.3% year-over-year to 40.169 MMT. The Indian Sugar and Bio-energy Manufacturers Association previously lowered its forecast for 2024/25 India’s sugar production to 26.4 MMT, citing reduced cane yields.

Global Sugar Deficit Forecasts Add Complexity

The International Sugar Organization (ISO) recently raised its forecast for the global sugar deficit to a nine-year high of -5.47 MMT for 2024/25, up from the earlier prediction of -4.88 MMT. This reflects a tighter market compared to the 2023/24 global sugar surplus of 1.31 MMT. In addition, the ISO cut its 2024/25 global sugar production forecast to 174.8 MMT, down from 175.5 MMT.

Last year’s drought and excessive heat caused fires in Brazil that harmed sugar crops, particularly in São Paulo, the leading sugar-producing state. Green Pool Commodity Specialists noted potential losses of up to 5 MMT of sugar cane due to such fires. As reported last month, Conab anticipates a -3.4% year-over-year decline in Brazil’s sugar production for 2024/25, estimating it at 44.118 MMT due to lower cane yields linked to adverse weather conditions.

Additionally, the USDA’s bi-annual report released on November 21 projected that global sugar production for 2024/25 would increase +1.5% year-over-year to a record 186.619 MMT. In parallel, human sugar consumption is likely to also rise, by +1.2% to a record 179.63 MMT. Furthermore, the USDA expects that the ending stocks for 2024/25 will decline -6.1% year-over-year to 45.427 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 in this article is solely for informational purposes.

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