Sugar Prices Pressured by the Outlook for a Global Surplus

Sugar prices declined Thursday, consolidating near two-week lows, pressured by expectations of a global sugar surplus in 2025/26, with Datagro projecting a +1.53 MMT surplus and StoneX forecasting +3.74 MMT. Increased production forecasts from India and Brazil, driven by favorable weather conditions, further contributed to the downward pressure, despite conflicting reports from ISMA indicating a potential decrease in India's sugar production. Conversely, the International Sugar Organization (ISO) raised its 2024/25 global sugar deficit forecast, signaling a tightening market, creating mixed signals for sugar market participants.

Analysis

Sugar prices experienced a downturn, with July NY world sugar #11 (SBN25) closing -1.69% and August London ICE white sugar #5 (SWQ25) down -1.93%, consolidating near two-week lows amidst expectations of a global sugar surplus for the 2025/26 season. Consultant Datagro projects a +1.53 MMT surplus for 2025/26, a significant shift from an estimated -4.67 MMT deficit in 2024/25, while StoneX forecasts an even larger 2025/26 surplus of +3.74 MMT. This bearish sentiment is partly fueled by anticipated production increases in key regions: USDA's Foreign Agricultural Service (FAS) predicts India's 2025/26 output will rise +26% year-over-year to 35 MMT, supported by forecasts of favorable monsoon rains (105% of long-term average) and increased sugar acreage. Similarly, Brazil's 2025/26 production is expected to climb, with USDA FAS projecting +2.3% y/y to 44.7 MMT and Conab forecasting +4.0% y/y to 45.875 MMT. Thailand's Office of the Cane and Sugar Board also reported a +14% y/y rise in 2024/25 production to 10.00 MMT. However, the market faces significant conflicting signals. The International Sugar Organization (ISO) recently increased its 2024/25 global sugar deficit forecast to a 9-year high of -5.47 MMT and concurrently cut its 2024/25 global production estimate to 174.8 MMT, suggesting a tighter near-term market. Corroborating this, the Indian Sugar Mills Association (ISMA) projects India's 2024/25 sugar production will fall -17.5% y/y to a 5-year low of 26.2 MMT, with actual production from October 1 to May 15 already down -17% y/y; furthermore, Indian Food Secretary Chopra indicated 2024/25 exports might only total 800,000 MT, below earlier expectations of 1 MMT. Brazil's near-term output also shows signs of weakness: Unica reported a -38.6% y/y decrease in Center-South sugar production for April, and Conab revised its 2024/25 Brazil production forecast downward by -3.4% y/y to 44.118 MMT, citing lower sugarcane yields due to drought and excessive heat, which reportedly caused sugarcane losses of up to 5 MMT from fires in Sao Paulo. The USDA's bi-annual report from November 21 projected global 2024/25 sugar production to climb +1.5% y/y to a record 186.619 MMT and consumption to increase +1.2% y/y to a record 179.63 MMT, yet also forecasted global 2024/25 ending stocks to decline -6.1% y/y to 45.427 MMT, adding to the complex and mixed outlook.

Key Decisions for Investors

• Investors should closely monitor upcoming weather developments in India and Brazil, particularly monsoon performance and harvest conditions, as these will be critical in determining actual production outcomes against current divergent forecasts for the 2024/25 and 2025/26 seasons.
• Given the conflicting data regarding the 2024/25 deficit (per ISO, ISMA) versus the projected 2025/26 surplus (per Datagro, StoneX), a cautious stance is warranted; sugar prices may exhibit volatility or remain range-bound until a more consistent global supply-demand picture emerges.
• Pay particular attention to updated production figures from Brazil's Center-South, India's harvest progress relative to ISMA's bearish forecast, any official changes to India's sugar export policy, and revised global balance estimates from key agencies to navigate the prevailing market uncertainty.