Sugar prices are experiencing a notable uptick, marking a second consecutive day of gains. The increase in prices for both New York world sugar #11 and London ICE white sugar #5 can be attributed to fund short-covering, driven by recent data suggesting a decrease in sugar production in Brazil—a leading global producer.
On July 5, the price of NY world sugar #11 increased by 0.76%, closing at $17.21 per pound, while August London ICE white sugar #5 rose by 0.84%, ending at $479.20 per metric ton. The upward momentum follows a pattern of volatility observed over the past two months, during which sugar prices fell sharply to multi-year lows. In fact, July saw NY sugar reach a near four-year low, while its London counterpart dipped to a four-and-a-quarter month low.
The recent surge in prices comes amidst a backdrop of concerning reports from Brazil. Unica, the country’s leading sugar industry association, announced that Brazil’s sugar production for the first half of the 2025/26 marketing season has decreased significantly. As of mid-May, output had dropped by 6.8% year-over-year (y/y) to 2.408 million metric tons (MMT), contributing to a cumulative decline of 22.7% y/y, recorded at 3.989 MMT.
The collapses in sugar prices over recent months have largely stemmed from expectations of a global surplus. The United States Department of Agriculture (USDA), in its biannual report, projected an increase in global sugar production by 4.7% y/y, reaching a record of 189.318 million metric tons. This surge in production is expected to produce a global sugar surplus of 41.188 MMT, indicating a 7.5% rise from previous estimates.
Notably, Brazil, which plays a pivotal role in the global sugar economy, is expected to produce 44.7 MMT in the 2025/26 season, an increase of 2.3% y/y. In parallel, India’s sugar production is forecasted to rise dramatically, climbing 25% y/y to 35.3 MMT, thanks to favorable monsoon conditions and an expansion in sugarcane acreage. Similarly, Thailand, the world’s third-largest sugar producer, anticipates a 2% increase in its production to 10.3 MMT for the same marketing season.
The Indian monsoon season, which runs from June to September, is critical for sugar production. The Ministry of Earth Sciences has forecast an above-average monsoon this year, expecting total rainfall to reach 105% of the long-term average. Such meteorological conditions are anticipated to benefit agricultural yields, including sugar, which could further saturate the global market in the coming months.
Though India has indicated some readiness to allow exports, the government previously restricted sugar exports to stabilize domestic supply. In January, it granted permission for sugar mills to export 1 MMT for the season, reflecting a slight easing of previous restrictions that capped exports at 6.1 MMT in the 2022/23 season, down from a record 11.1 MMT in the prior season.
Underlining the uncertainties facing the Indian sugar market, forecasts from the Indian Sugar Mills Association (ISMA) indicate a potential fall in sugar production for the 2024/25 season to a five-year low of 26.2 MMT, down 17.5% y/y. Data from earlier in the year illustrated that sugar production from October 1 to May 15 registered at 25.74 MMT, reflecting a 17% decrease compared to the same period the previous year. Moreover, India’s Food Secretary, Sudhanshu Chopra, remarked that exports for the 2024/25 season could total only 800,000 MT—significantly below expectations—which could further complicate market dynamics.
The outlook for sugar production is not uniformly bleak. In Thailand, estimates for the 2024/25 season indicate a 14% rise in production to 10.00 MMT. This positive trajectory is expected to impact global prices, given Thailand’s critical position as a significant exporter.
At the same time, there are signs of decreased sugar production in other regions, which have introduced some support to current price levels. Recent reports from Unica highlighted a 5.3% year-over-year decline in Brazil’s cumulative sugar output through March, reaching 40.169 MMT. Coupled with forecasts from the International Sugar Organization (ISO), which predict a global sugar deficit of 5.47 MMT for 2024/25—the highest in nine years—there are indications of tightening supply in the marketplace.
Adverse conditions including drought and excessive heat have adversely affected sugar revenues, particularly in Brazil’s key sugar-producing regions. Analysts estimate that fires, exacerbated by tough climatic conditions, may have led to the loss of as much as 5 MMT of sugarcane. Brazil’s National Supply Company (Conab) has also revised its projections, anticipating a 3.4% decline in sugar production for the 2024/25 season.
The USDA’s latest outlook paints a complex picture for the years ahead, forecasting that global sugar consumption for 2025/26 will increase by 1.4% y/y to a record 177.921 MMT. These trends underscore the intricate balance of supply, demand, and climatic conditions, highlighting the pivotal role of key producing nations in shaping global sugar prices.
Overall, sugar markets are navigating a landscape influenced by conflicting signals: while production forecasts from major producers like Brazil and India point to potential surpluses, localized adverse conditions, along with heightened demand, complicate the narrative, creating an environment that warrants close monitoring by stakeholders across the industry. As the prospect for additional rainfall in key growing regions looms, the recent price movements signal the ongoing volatility endemic to agricultural commodities, which can often fluctuate based on a complex interplay of geopolitical, environmental, and economic factors.