Sugar prices declined sharply, with London sugar hitting a two-week low, driven by projections of a global sugar surplus for the 2025/26 season from Covrig Analytics (+4.1 MMT) and the USDA, which forecasts record production and higher ending stocks. This bearish sentiment is reinforced by increased output from Brazil, anticipated higher exports from India due to strong monsoon rains and projected production growth, and expected higher production from Thailand. While the International Sugar Organization (ISO) forecasts a minor deficit for 2025/26, this is significantly smaller than the previous year and contrasts with the more pronounced surplus outlooks from other major agencies.
March NY world sugar 11 (SBH26) on Wednesday closed down -0.34 (-2.04%), and December London ICE white sugar 5 (SWZ25) closed down -7.30 (-1.59%). Sugar prices fell sharply for a second day on Wednesday, with London sugar sliding to a 2-week low. Sugar prices are falling due to a negative carryover from Tuesday, when Covrig Analytics projected a global sugar surplus of +4.1 MMT for the 2025/26 season. NY sugar initially climbed to a 1.75-month high on Tuesday on signs of lower sugar content from this year's Brazil sugar crush. Last Thursday, Unica reported that the sugar content in Brazil's Center-South sugarcane crushed cane in the first half of September dropped to 154.58 kilograms per ton (kg/ton) compared to 160.07 kg/ton in the same period a year earlier. Higher sugar output in Brazil is bearish for prices. Unica reported last Thursday that Brazil's Center-South sugar output in the first half of September rose by +15.7% y/y to 3.622 MT. Also, the percentage of sugarcane crushed for sugar by Brazil's sugar mills in the second half of August increased to 53.49% from 47.74% the same time last year. However, cumulative 2025-26 Center-South sugar output through mid-September fell -0.1% y/y to 30.388 MMT. The outlook for higher sugar exports from India is negative for sugar prices, as abundant monsoon rains may produce a bumper sugar crop. India's Meteorological Department reported last Tuesday that the cumulative monsoon rain in India as of September 30 was 937.2 mm, 8% above normal and the strongest monsoon in 5 years. On June 2, India's National Federation of Cooperative Sugar Factories projected that India's 2025/26 sugar production would climb +19% y/y to 34.9 MMT, citing larger planted cane acreage. That would follow a -17.5% y/y decline in India's sugar production in 2024/25 to a 5-year low of 26.2 MMT, according to the Indian Sugar Mills Association (ISMA). Another bearish factor for sugar was the recent assertion from sugar trader Sucden that India may divert 4 MMT of sugar to make ethanol in 2025/26, which is not enough to ease the country's sugar surplus and may prompt India's sugar mills to export as much as 4 MMT of sugar, above earlier expectations of 2 MMT. India is the world's second-largest producer of sugar. The outlook for higher sugar production in Thailand is bearish for prices after the Thai Sugar Miller Corp projected last Wednesday that Thailand's 2025/26 sugar crop will increase by +5% y/y to 10.5 MMT. On May 2, Thailand's Office of the Cane and Sugar Board reported that Thailand's 2024/25 sugar production rose +14% y/y to 10.00 MMT. Thailand is the world's third-largest sugar producer and the second-largest exporter of sugar. On August 29, the International Sugar Organization (ISO) forecast a global sugar deficit for the 2025/26 season, the sixth consecutive year of sugar deficits. ISO projects a global 2025/26 sugar deficit of -231,000 MT, down from the -4.88 MMT shortfall in 2024/25. ISO also projects 2025/26 global sugar production will rise by +3.3% y/y to 180.6 MMT, and 2025/26 global sugar consumption will increase +0.3% y/y to 180.8 MMT. The USDA, in its bi-annual report released May 22, projected that global 2025/26 sugar production would climb +4.7% y/y to a record 189.318 MMT and that global 2025/26 human sugar consumption would increase +1.4% y/y to a record 177.921 MMT. The USDA also forecasted that 2025/26 global sugar ending stocks would climb +7.5% y/y to 41.188 MMT. The USDA's Foreign Agricultural Service (FAS) predicted that Brazil's 2025/26 sugar production would rise +2.3% y/y to a record 44.7 MMT FAS predicted that India's 2025/26 sugar production would rise +25% y/y to 35.3 MMT due to favorable monsoon rains and increased sugar acreage. FAS predicted that Thailand's 2025/26 sugar production will climb +2% y/y to 10.3 MMT. On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Sugar prices experienced a sharp decline, with London sugar reaching a two-week low, primarily driven by projections of a significant global sugar surplus for the 2025/26 season. Covrig Analytics forecast a +4.1 MMT surplus, while the USDA anticipated record global production of 189.318 MMT (+4.7% y/y) and a substantial increase in ending stocks by +7.5% y/y to 41.188 MMT, reinforcing a bearish market sentiment. Key supply-side increases underpin this outlook: Brazil's Center-South sugar output rose +15.7% y/y to 3.622 MT in early September, and its mills crushed a higher percentage of sugarcane for sugar. India, the world's second-largest producer, is projected to increase sugar production by +19% y/y to 34.9 MMT in 2025/26 due to abundant monsoon rains and larger planted acreage, potentially leading to exports of up to 4 MMT. Thailand, the third-largest producer, also expects a +5% y/y increase to 10.5 MMT. While the International Sugar Organization (ISO) still forecasts a minor global deficit of -231,000 MT for 2025/26, this is a significant reduction from the -4.88 MMT deficit in 2024/25 and contrasts sharply with the larger surplus projections from other agencies. The cumulative effect of increased production forecasts from major regions suggests sustained pressure on sugar prices despite an initial short-lived rally on signs of lower Brazil sugar content.
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