Sugar Prices Slump as the Global Supply Situation Improves

Sugar prices are sharply lower, with NY sugar plummeting to a 3-3/4 year low and London sugar posting a 4-1/4 month low, driven by expectations of a global sugar surplus. The USDA projects a +4.7% y/y increase in global 2025/26 sugar production to a record 189.318 MMT, resulting in a surplus of 41.188 MMT, up 7.5% y/y, with increased output expected from Brazil, India and Thailand. Despite some reports of lower sugar production in Brazil and India, and a raised global sugar deficit forecast from the ISO, the overall outlook for increased global supply is weighing on prices.

Analysis

Sugar prices have experienced a sharp decline, with NY sugar futures (SBN25) reaching a 3-3/4 year nearest-futures low and London white sugar (SWQ25) posting a 4-1/4 month low, primarily driven by expectations of a substantial global sugar surplus in the upcoming 2025/26 season. The USDA's recent biannual report projects a +4.7% year-over-year increase in global 2025/26 sugar production to a record 189.318 million metric tons (MMT), leading to an anticipated global sugar surplus of 41.188 MMT, up 7.5% year-over-year. This outlook is supported by USDA Foreign Agricultural Service projections for record 2025/26 production in Brazil (+2.3% y/y to 44.7 MMT) and significant increases in India (+25% y/y to 35.3 MMT) and Thailand (+2% y/y to 10.3 MMT), with India's prospects aided by forecasts of an above-normal monsoon. Conversely, conflicting data points exist for the nearer 2024/25 season: the ISMA projects India's 2024/25 production will fall -17.5% y/y to a 5-year low of 26.2 MMT, and reported that India's sugar production from Oct 1-May 15 was down -17% from the prior year. Additionally, Unica reported Brazil's April 2025/26 Center-South sugar production fell -38.6% y/y, and the International Sugar Organization (ISO) on May 15 raised its 2024/25 global sugar deficit forecast to a 9-year high of -5.47 MMT. Despite these shorter-term tightening signals, including drought impacts in Brazil, the market appears heavily weighted towards the USDA's longer-term surplus forecast for 2025/26, which also anticipates global ending stocks climbing +7.5% y/y.

Key Decisions for Investors

• The dominant USDA forecast for a significant global sugar surplus in 2025/26 suggests continued downward pressure on prices, warranting caution for long positions and consideration of bearish strategies.
• Investors should closely monitor upcoming 2024/25 production data from Brazil and India, alongside ISO updates, as conflicting reports indicate potential near-term market tightness that could introduce volatility or temporary price support against the longer-term bearish trend.
• The actual Indian monsoon performance and any further adjustments to India's sugar export policies, particularly for the 2024/25 season, remain critical variables that could materially alter the supply landscape and price trajectory.