Sugar Prices Rebound Due to a Weak Dollar

Sugar prices saw a modest recovery today, buoyed by a weaker dollar, after earlier hitting multi-year lows. The market remains predominantly bearish due to widespread projections of robust global sugar supplies for 2025/26, with BMI Group and Covrig Analytics forecasting significant surpluses, and the USDA anticipating record production from key producers like Brazil, India, and Thailand. This outlook for increased output, particularly from India following strong monsoon rains, contrasts with the International Sugar Organization's projection of a small global deficit for the upcoming season.

Analysis

Sugar prices experienced a modest recovery today, with NY #11 and London #5 futures rising +1.60% and +0.74% respectively, driven by a weaker dollar and short covering after hitting multi-year lows. This short-term bounce follows a seven-month period of significant pressure, which saw NY sugar reach a 4.5-year nearest-futures low last month.

The predominant market outlook remains bearish, underpinned by robust global sugar supply projections for 2025/26. BMI Group forecasts a 10.5 MMT surplus, while Covrig Analytics projects 4.1 MMT. The USDA anticipates record global production of 189.318 MMT, with key contributions from Brazil (+2.3% y/y to 44.7 MMT), India (+25% y/y to 35.3 MMT), and Thailand (+2% y/y to 10.3 MMT.

However, conflicting forecasts introduce nuance; the International Sugar Organization (ISO) projects a global deficit of -231,000 MT for 2025/26, marking a sixth consecutive deficit year, albeit significantly smaller than the prior year's -4.88 MMT. Additionally, recent reports indicate a decline in sugar content in Brazil's Center-South sugarcane, dropping to 154.58 kg/ton from 160.07 kg/ton year-over-year, which could temper actual output.

Regional supply dynamics are critical, with India's 2025/26 production expected to climb +19% due to strong monsoon rains, potentially leading to exports of up to 4 MMT. Brazil's Center-South sugar output in early September rose +15.7% year-over-year, yet cumulative 2025-26 output through mid-September saw a slight -0.1% decline, highlighting complex production trends.

Key Decisions for Investors

• Monitor the divergence in global sugar balance forecasts, particularly between the USDA's surplus projections and ISO's deficit outlook, as this will dictate long-term price direction.
• Watch for updates on production figures from major producers like Brazil, India, and Thailand, especially regarding actual sugar content and export policies, which could impact global supply availability.
• Consider short-term trading opportunities arising from technical factors like currency fluctuations and short covering, but maintain a cautious stance given the prevailing bearish sentiment driven by anticipated supply increases.