Sugar Prices Rise Amid Global Surplus Concerns
July NY world sugar #11 (SBN25) is up +0.03 (+0.17%) today, while August London ICE white sugar #5 (SWQ25) shows an increase of +0.90 (+0.18%).
Notable shifts in the dollar index (DXY00), which hit a one-week low, have boosted sugar prices. However, expectations of a global sugar surplus are casting a shadow over the market.
Global Surplus Projections Impact Prices
Last week, consultant Datagro projected a global sugar surplus of +1.53 million metric tons (MMT) for the 2025/26 season, a substantial recovery from a deficit of -4.67 MMT in 2024/25. StoneX offers a more optimistic view, forecasting a surplus of +3.74 MMT for the same year.
Increased Production Forecasts from Major Producers
Signs of larger global sugar output further exert downward pressure on prices. On May 6, the USDA’s Foreign Agricultural Service (FAS) reported that India’s sugar production for 2025/26 is expected to rise by +26% year-over-year (y/y) to 35 MMT due to favorable rains and expanded sugar acreage. Additionally, Brazil’s sugar production is projected to increase +2.3% y/y to 44.7 MMT.
Moreover, Conab forecasts Brazil’s sugar production will climb +4.0% y/y to 45.875 MMT. On April 15, India’s Ministry of Earth Sciences predicted an above-normal monsoon this year, forecasting rainfall at 105% of the long-term average, which could yield a bumper crop.
Export Policies and Regional Adjustments
The Indian government, easing restrictions on sugar exports, announced on January 20 that it would permit sugar mills to export 1 MMT this season. Previously, exports were limited to maintain local supplies. During the 2022/23 season, mills only exported 6.1 MMT, down from a record 11.1 MMT in 2021/22. However, the Indian Sugar Mills Association (ISMA) projects a steep decline in India’s 2024/25 sugar production, estimating a -17.5% y/y drop to a five-year low of 26.2 MMT. ISMA also reported a 17% decrease in sugar production from October 1 to May 15, totaling 25.74 MMT. Furthermore, India’s Food Secretary mentioned that sugar exports for 2024/25 might only reach 800,000 MT, lower than earlier expectations of 1 MMT.
Regional Insights from Thailand and Brazil
In Thailand, a forecast of increased sugar production also weighs on the market. The Office of the Cane and Sugar Board reported a +14% y/y rise to 10.00 MMT for the 2024/25 season, reinforcing Thailand’s position as the world’s third-largest sugar producer and second-largest exporter.
Supportive Indicators for Sugar Prices
Some indicators suggest potential support for prices. Unica recently reported that Brazil’s Center-South sugar production for April fell -38.6% y/y to 1.58 MMT. Cumulative sugar output through March for the 2024/25 season was down 5.3% y/y to 40.169 MMT. The Indian Sugar and Bio-energy Manufacturers Association has also cut its production forecast down to 26.4 MMT from 27.27 MMT due to lower cane yields.
The International Sugar Organization (ISO) has raised its 2024/25 global sugar deficit estimate to a nine-year high of -5.47 MMT, a revision from the February estimate of -4.88 MMT. This indicates a tightening market in contrast to the 2023/24 global surplus of 1.31 MMT. The ISO has also adjusted its global sugar production forecast downward to 174.8 MMT.
Weather-Related Production Challenges in Brazil
Last year’s drought and extreme heat incurred significant losses for Brazil’s sugar crops, jeopardizing yields. Green Pool Commodity Specialists noted a potential loss of up to 5 MMT of sugar cane due to fires in Sao Paulo, Brazil’s top sugar-producing state. Conab announced a forecast for Brazil’s sugar production to decline -3.4% y/y to 44.118 MMT, attributing the decrease to lower yields from adverse weather.
USDA Global Sugar Consumption Outlook
The USDA’s biannual report released on November 21 projected a +1.5% y/y increase in global sugar production for 2024/25, reaching a record 186.619 MMT. Meanwhile, human sugar consumption is expected to rise by +1.2% y/y to 179.63 MMT, with ending stocks predicted to drop -6.1% y/y to 45.427 MMT.
On the date of publication, Rich Asplund did not hold any positions in the mentioned securities. All data in this article is for informational purposes only. For more details, please view the Barchart Disclosure Policy.
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The views expressed herein are solely those of the author and do not necessarily reflect the views of Nasdaq, Inc.
