Global Sugar Prices Decline Amid Surplus Predictions for 2025
July NY world sugar #11 (SBN25) is currently down -0.12 (-0.66%), while August London ICE white sugar #5 (SWQ25) has decreased -4.50 (-0.88%).
Market Pressure from Global Surplus Outlook
Sugar prices are facing downward pressure due to expectations of a global surplus. Consultant Datagro has projected a 2025/26 global sugar surplus of +1.53 million metric tons (MMT), a significant reversal from a -4.67 MMT deficit expected in 2024/25.
Recent Price Movements and Trends
Short covering over the past week has temporarily pushed sugar prices higher. NY sugar reached a five-week high on Tuesday, while London sugar hit a two-week high today. However, earlier in May, NY sugar experienced a low not seen in 3.75 years. London sugar similarly fell to a 3.75-month low last Wednesday, influenced by projections of increased sugar production in Brazil.
Brazil’s Production Forecasts
On April 29, Conab estimated that Brazil’s 2025/26 sugar output would rise by 4.0% year-on-year to 45.875 MMT. This forecast reflects a broader trend of increasing output. The USDA’s Foreign Agricultural Service (FAS) predicts India’s 2025/26 sugar production will surge by 26% year-on-year to 35 MMT, thanks to favorable monsoon conditions and expanded acreage.
Impact of Monsoon and Rainfall
The anticipated arrival of abundant rainfall in India threatens to lower sugar prices further. On April 15, India’s Ministry of Earth Sciences forecasted an above-normal monsoon season, projecting rainfall to exceed 105% of the long-term average from June through September.
Changes in Export Policies and Production Expectations
India’s recent government policy changes, allowing sugar mills to export 1 MMT this season, add to the bearish outlook. Previously, sugar exports were significantly restricted since October 2023 to ensure local supply stability. The Indian Sugar Mills Association (ISMA) now anticipates a substantial decrease in sugar production for 2024/25, estimating a -17.5% year-on-year drop to 26.4 MMT.
Thailand’s Production Increases
Sugar forecasts from Thailand also contribute to a negative price outlook. On May 2, Thailand’s Office of the Cane and Sugar Board reported a 14% increase in 2024/25 production to 10.00 MMT. As the world’s third-largest producer, Thailand’s output directly impacts global sugar dynamics.
Support from Production Cuts Elsewhere
Conversely, some developments suggest potential support for sugar prices. On Tuesday, Unica reported a 38.6% year-on-year drop in Brazil’s 2025/26 sugar production for April, totaling 1.58 MMT. Additionally, the cumulative output for Brazil’s Center-South through March was down 5.3% year-on-year.
Global Sugar Forecast Adjustments
The International Sugar Organization (ISO) recently raised its 2024/25 global sugar deficit forecast to -4.88 MMT, up from -2.51 MMT. This revision suggests tightening market conditions following a surplus of 1.31 MMT in 2023/24.
Environmental Challenges Affecting Production
In Brazil, drought and excessive heat have damaged sugar crops, particularly in São Paulo, the leading sugar-producing state. Green Pool Commodity Specialists estimate that up to 5 MMT of sugarcane could have been lost due to these environmental challenges.
Global Sugar Consumption and Stock Projections
The USDA’s November report projected a 1.5% increase in global sugar production for 2024/25 to a record 186.619 MMT. Human sugar consumption for the same period is expected to rise by 1.2% to 179.63 MMT, while global sugar stocks may decline by 6.1% to 45.427 MMT.
On the date of publication, Rich Asplund did not hold any positions in the securities mentioned in this article. All information is for informational purposes only. For more details, please consult the Barchart Disclosure Policy.here.
The views expressed in this article are those of the author and do not necessarily reflect those of any institution.
