Sugar Prices Weaken on Expectations for a Global Sugar Surplus

Sugar prices are declining, consolidating just above two-week lows, driven by expectations of a global sugar surplus in 2025/26, with Datagro projecting +1.53 MMT and StoneX forecasting +3.74 MMT. These projections contrast sharply with the 2024/25 deficit of -4.67 MMT. Contributing to the bearish outlook are forecasts of increased sugar production in India and Brazil, although conflicting reports from ISMA suggest a potential decline in India's 2024/25 production, creating uncertainty in the market.

Analysis

Sugar prices are currently experiencing downward pressure, with July NY world sugar #11 (SBN25) down 1.86% and August London ICE white sugar #5 (SWQ25) down 2.17%, consolidating above recent two-week lows. This movement is largely attributed to emerging expectations of a significant global sugar surplus for the 2025/26 season, with consultant Datagro projecting a +1.53 MMT surplus and StoneX forecasting an even larger +3.74 MMT surplus, representing a sharp recovery from Datagro's estimated 2024/25 global sugar deficit of -4.67 MMT. Supporting this bearish outlook for 2025/26 are projections of increased output from key producers: the USDA's Foreign Agricultural Service (FAS) anticipates India's production to rise by 26% year-over-year to 35 MMT and Brazil's to climb by 2.3% to 44.7 MMT, with Conab offering an even higher Brazilian forecast of +4.0% to 45.875 MMT. Favorable monsoon forecasts in India, projected at 105% of the long-term average, and Thailand's reported 14% year-over-year increase in 2024/25 production to 10.00 MMT further contribute to surplus expectations. However, the market faces conflicting signals primarily concerning the current 2024/25 season. The International Sugar Organization (ISO) recently raised its 2024/25 global sugar deficit forecast to a 9-year high of -5.47 MMT and cut its global production estimate to 174.8 MMT. Concurrently, ISMA projects India's 2024/25 sugar production will fall by 17.5% to a 5-year low of 26.2 MMT, and Unica reported a 38.6% year-over-year drop in Brazil's Center-South April sugar production, with Conab also forecasting a 3.4% decline in Brazil's overall 2024/25 output due to adverse weather. The USDA's November 2021 bi-annual report for 2024/25 indicated record global production and consumption but also a 6.1% year-over-year decline in global ending stocks, highlighting a complex interplay between current market tightness and anticipated future abundance.

Key Decisions for Investors

• Investors should acknowledge the prevailing downward pressure on sugar prices stemming from strong forecasts of a global surplus in the 2025/26 season.
• Closely monitor actual 2024/25 production figures from India (ISMA, government) and Brazil (Unica, Conab), alongside ISO deficit revisions, as significant deviations from current expectations could challenge the bearish long-term outlook or offer short-term counter-trend opportunities.
• Maintain vigilance on Indian monsoon progress and any adjustments to its sugar export policy, as these factors are critical determinants of global supply availability and potential price volatility.