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Sugar Prices Rebound as Dollar Weakness Sparks Short Covering

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Sugar Prices Rebound as Dollar Weakness Sparks Short Covering

Sugar futures ticked up about 1.7% (Mar NY SBH26 +1.77%, Mar London SWH26 +1.72%) on dollar weakness and short-covering, but the market remains structurally bearish as a string of production upgrades point to abundant global supplies. India reporting Oct–Nov output +43% y/y to 4.11 MMT and ISMA raising 2025/26 estimates (variously 31 MMT–35.3 MMT in different forecasts), Conab nudging Brazil to 45 MMT and Unica showing Center‑South output up y/y, together with ISO, Czarnikow and USDA/FAS forecasts (USDA projects a record 189.3 MMT global crop and ending stocks rising to 41.19 MMT) all signal a swing to surplus that has driven multi‑year lows in sugar futures. While India’s decision to allow 1.5 MMT of exports provides some market mechanics to absorb supply, the consensus of larger crops in India, Brazil, Thailand and elsewhere implies continued downward pressure on prices despite the short-term bounce.

Analysis

March NY sugar (SBH26) rose +1.77% and March London white sugar (SWH26) rose +1.72% on the publication date, a short-covering bounce linked explicitly to dollar weakness rather than a change in fundamental supply/demand. That price uptick follows a sustained downtrend: London posted a 4.75-year nearest-futures low and New York hit a 5-year nearest-futures low in November amid growing evidence of ample global supplies. India and Brazil are the primary drivers of the bearish supply narrative. India reported Oct–Nov output up +43% year-over-year to 4.11 MMT and ISMA raised its 2025/26 estimate to 31 MMT (with alternative FAS estimates higher), while Conab raised Brazil’s 2025/26 sugar forecast to 45 MMT and Unica showed Center-South output up +8.7% year-over-year in early November to 983 MT (39.179 MMT cumulative). Major agencies now forecast a swing to surplus: the ISO projects a 1.625 MMT surplus for 2025/26, Czarnikow boosted its surplus estimate to 8.7 MMT, and the USDA projects a record 189.318 MMT global crop with ending stocks rising to 41.188 MMT. India’s 1.5 MMT export quota provides limited relief versus prior 2 MMT expectations, but the aggregate of larger crops in India, Brazil, Thailand and forecasted higher ending stocks argues for continued downward price pressure absent demand surprises or policy curbs.