Sugar Prices Fall to Lowest Levels in More Than 4 Years

Global sugar prices have fallen to multi-year lows, driven by robust supply forecasts from key producing nations. Brazil's Center-South sugar output is significantly up, with consultants like Datagro and USDA FAS projecting record production for 2026/27. Further bearish pressure comes from India and Thailand, where strong monsoon rains and increased acreage are expected to lead to bumper crops and higher exports, contributing to projected global surpluses by BMI Group, Covrig Analytics, and the USDA, despite a smaller deficit forecast by the ISO.

Analysis

Sugar prices have declined to multi-year lows, with NY sugar reaching a 4.5-year low and London sugar a 4.25-year low, primarily driven by robust global supply forecasts. This weakness persists despite a brief recovery linked to higher crude oil prices, which can incentivize ethanol production over sugar.

Brazil's Center-South sugar output increased by +10.8% year-over-year in late September, with cumulative 2025-26 output up +0.8% through September. Both Datagro and USDA FAS project record 2026/27 production for Brazil at 44 MMT and 44.7 MMT, respectively. India's strong monsoon, 8% above normal, suggests a bumper crop, with NFCSF forecasting a +19% y/y increase in 2025/26 production to 34.9 MMT and potential exports of 4 MMT.

Thailand's 2025/26 sugar crop is projected to increase by +5% y/y to 10.5 MMT by the Thai Sugar Millers Corp., further contributing to bearish sentiment. Consequently, BMI Group projects a global 2025/26 sugar surplus of 10.5 MMT, while Covrig Analytics forecasts a 4.1 MMT surplus. The USDA also projects record global production of 189.318 MMT for 2025/26, leading to a +7.5% y/y increase in ending stocks.

While the International Sugar Organization (ISO) forecasts a global 2025/26 deficit of -231,000 MT, this is a significant reduction from the prior year's -4.88 MMT shortfall and still implies a +3.3% y/y rise in global production to 180.6 MMT, indicating a tightening supply/demand balance compared to other surplus projections but still reflecting increased output.

Key Decisions for Investors

• Given the strong bearish sentiment and projected global surpluses, investors should consider short positions or hedging strategies in sugar futures.
• Closely monitor weather developments in major producing regions like Brazil, India, and Thailand, as adverse conditions could alter current bumper crop forecasts and provide price support.
• Assess the potential for increased ethanol diversion from sugar cane in response to sustained higher crude oil prices, which could temporarily curb sugar supplies and impact price dynamics.