Sugar prices have recently experienced a modest uptick, marking a shift from their previously downward trajectory. On the last trading day, the New York world sugar No. 11 (SBN25) settled up by $0.05, or 0.29%, while the London ICE white sugar No. 5 (SWQ25) rose by $2.50, equivalent to a 0.53% increase. This rally on the market was largely driven by short-covering by investors following reports indicating a decline in sugar production in Brazil, the world’s largest sugar producer.
According to Unica, Brazil’s sugar industry association, the country’s sugar production in the 2025/26 agricultural year for the first half of May has fallen by 6.8% compared to the same period last year, amounting to 2.408 million metric tons (MMT). Cumulatively, Brazil’s sugar output through mid-May stood at 3.989 MMT, representing a significant year-on-year decline of 22.7%. This decrease has raised concerns among investors, allowing prices to stabilize as they assess the ramifications of reduced supply.
Historically, sugar prices have faced downward pressure over the recent months, with the New York variant falling to a 3¾-year low, while London sugar hit a 4¼-month low. These declines were primarily fueled by expectations of an impending global sugar surplus. Providing context, the U.S. Department of Agriculture (USDA) released its biannual report last Thursday, projecting a global sugar production increase of 4.7% year-on-year, which would reach a record 189.318 MMT for the 2025/26 season. This report also highlighted an anticipated global sugar surplus of 41.188 MMT, up 7.5% from the previous year, further pressuring market prices.
The surging production forecasts from major sugar-producing nations present a bleak outlook for prices. Notably, the USDA’s Foreign Agricultural Service (FAS) estimates that Brazil’s sugar production may rise by 2.3% year-on-year to a record 44.7 MMT. Meanwhile, India, another key player in the global sugar market, is projected to increase its production by a remarkable 25% to 35.3 MMT. This increase is attributed to favorable monsoon rains and expanded sugar cultivation areas. Similarly, Thailand, which ranks as the third-largest sugar producer globally, is expected to boost its production by 2% year-on-year to 10.3 MMT, further contributing to the anticipated oversupply.
The Indian monsoon season, running from June to September, holds particular significance for the sugar sector, with forecasts indicating above-normal rainfall, projected at 105% of the long-term average. Such conditions could enhance crop yields, amplifying the country’s sugar production potential for the upcoming season. Moreover, the Indian government’s decision to permit sugar mills to export an additional 1 MMT during this season, following several months of export restrictions, suggests a concerted effort to balance domestic supply with international demand. This follows a trend of restricted exports in 2023, where India sanctioned only 6.1 MMT for the 2022/23 season, a notable decline from the record 11.1 MMT authorized in the preceding season.
Despite these optimistic forecasts for sugar production, the Indian Sugar Mills Association (ISMA) has cautioned that forthcoming yields may be impacted, projecting a sharp decrease of 17.5% in India’s 2024/25 sugar production to a five-year low of 26.2 MMT. The association reported that for the harvest period from October 1 to May 15, sugar production reached 25.74 MMT, which is a significant 17% decline compared to the same timeframe last year. Additionally, Indian Food Secretary Sanjeev Chopra recently indicated that exports in the coming year may only total around 800,000 MT, a stark reduction from earlier expectations of 1 MMT.
While projections for robust sugar output in Thailand exert downward pressure on prices, recent developments signal potential tightening in other regions. Reports from Unica indicate a 5.3% decline in cumulative sugar output from Brazil’s Center-South region through March, while the ISMA has also revised its production forecast downward due to lower expected cane yields.
Compounding the complexities of the sugar market, the International Sugar Organization (ISO) on May 15 raised its forecast for the 2024/25 global sugar deficit to a nine-year peak, anticipating a shortfall of 5.47 MMT compared to a previous estimate of 4.88 MMT. This shift reflects an evolving balance within the market as it contemplates both diminished yields in certain countries and increased production in others.
In Brazil, adverse climate conditions have notably affected sugar crop viability. Last year, drought and excessive heat led to widespread fires that damaged fields in São Paulo, the heart of Brazil’s sugar industry. Green Pool Commodity Specialists have estimated that these fires could have led to the loss of up to 5 MMT of sugar cane. The Brazilian government’s crop forecasting agency, Conab, has projected that sugar production for the 2024/25 season will decline by 3.4% to 44.118 MMT due to lower yields stemming from these climatic impacts.
As the global sugar market navigates these shifting dynamics, the USDA anticipates that human sugar consumption will continue to grow, projected to reach an all-time high of 177.921 MMT in 2025/26, with ending stocks expected to elevate by 7.5% year-on-year to 41.188 MMT. Analysts and market participants remain vigilant, closely monitoring the interplay of production forecasts, climatic impacts, and governmental policies that could significantly influence market trajectories and pricing strategies in the months to come.
In this evolving narrative surrounding sugar prices and production dynamics, stakeholders from growers to buyers are adjusting their strategies in real-time, illustrating the interconnectedness of agricultural production and market performance. This ongoing development highlights the broader economic implications and the intricacies of navigating global food supply chains under fluctuating conditions, underscoring the vital importance of informed decision-making in the commodity markets.