Sugar prices surge due to increased demand as a result of reduced sugar production in Brazil.
Sugar prices experienced an increase today for the second consecutive day, with the July NY world sugar #11 (SBN25) rising 0.13 percent (+0.76%) and August London ICE white sugar #5 (SWQ25) climbing 4.00 percent (+0.84%).
Joined by positive carryover from Thursday's reports, the surge was driven by indications of a smaller sugar output in Brazil. Unica, a Brazilian cane industry association, reported a 6.8 percent year-on-year decrease in Brazil's 2025/26 Center-South sugar production during the first half of May, amounting to 2.408 million metric tons (MMT). Adding to this, cumulative 2025/26 Brazil Center-South sugar output by mid-May dropped 22.7 percent year-on-year to 3.989 MMT.
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Over recent weeks, sugar prices have descended following a two-month downturn. NY sugar reached a 3-3/4 year nearest-futures low on Thursday, and London sugar tumbled to a 4-1/4 month low. Anticipated global sugar surpluses have weighed heavily on prices.
In the USDA's latest biannual report, released last Thursday, experts projected global 2025/26 sugar production to edge up by 4.7 percent year-over-year (y/y) to a record 189.318 MMT. Simultaneously, a significant global sugar surplus of 41.188 MMT was forecasted, an increase of 7.5 percent year-on-year.
The bullish scenario, however, could be affected by a rise in global sugar output. The USDA's Foreign Agricultural Service (FAS) anticipated Brazil's 2025/26 sugar production to climb 2.3 percent y/y to a record 44.7 MMT. Similarly, India's 2025/26 sugar production is projected to surge by 25 percent y/y to 35.3 MMT, owing to favorable monsoon rains and increased sugar acreage. Moreover, Thailand's 2025/26 sugar production is anticipated to rise 2 percent y/y to 10.3 MMT.
India's looming sugar crop is concerning as the country projects an above-normal monsoon rainfall this year, with total rainfall forecasted to be 105 percent of the long-term average. The Indian monsoon extends from June through September.
To offset the domestic sugar oversupply, the Indian government announced on January 20 that it would permit sugar mills to export 1 MMT of sugar for the current season. Previously, export restrictions were maintained to ensure adequate domestic supplies since October 2023. However, India allowed mills to export only 6.1 MMT of sugar during the 2022/23 season until September 30, following 11.1 MMT in the previous season. The Indian Sugar Manufacturers' Association (ISMA) expects India's 2024/25 sugar production to fall 17.5 percent y/y to a five-year low of 26.2 MMT.
Despite the Indian government's decision to temporarily liquidate 1 MMT of sugar from the domestic market, the ISMA reported on May 1 that India's sugar production from October 1, 2024, through May 15, 2025, was 25.74 MMT. This indicates a decline of 17 percent compared to the same period last year. Furthermore, Indian Food Secretary Chopra stated on May 1 that India's 2024/25 sugar exports may reach only 800,000 MT, below earlier expectations of 1 MMT.
The anticipated rise in sugar production in Thailand bears a bearish connotation for sugar prices. On May 2, Thailand's Office of the Cane and Sugar Board reported that Thailand's 2024/25 sugar production grew by 14 percent y/y to 10.00 MMT.
On the contrary, signs of reduced global sugar production are favorable for prices. Unica reported on April 14 that the cumulative 2024/25 Brazil Center-South sugar output through March dwindled by 5.3 percent y/y to 40.169 MMT. Meanwhile, on March 12, the Indian Sugar and Bio-energy Manufacturers Association cut its 2024/25 India sugar production forecast to 26.4 MMT from a January forecast of 27.27 MMT, due to lower cane yields.
Lastly, the International Sugar Organization (ISO) on May 15 boosted its 2024/25 global sugar deficit forecast to a nine-year high of -5.47 MMT from a February forecast of -4.88 MMT. This indicates a tightening market following the 2023/24 global sugar surplus of 1.31 MMT. The ISO also reduced its 2024/25 global sugar production forecast to 174.8 MMT in comparison to its February projection of 175.5 MMT.
Notably, adverse weather events such as last year's fires in Brazil's Sao Paulo state, which damaged sugar crops, are still worrying factors. Green Pool Commodity Specialists suggested that as much as 5 MMT of sugar cane may have been lost due to the blazes, while Conab, Brazil's government crop forecasting agency, predicted 2024/25 Brazil sugar production to fall 3.4 percent y/y to 44.118 MMT. This decline was attributed to reduced sugarcane yields caused by drought and excessive heat.
In its bi-annual report issued last Thursday, the USDA projected global 2025/26 sugar production to ascend by 4.7 percent y/y to 189.318 MMT. The USDA also assumed that global 2025/26 human sugar consumption would swell by 1.4 percent y/y to a record 177.92 million metric tons (MMT). Moreover, 2025/26 global sugar ending stocks were anticipated to expand by 7.5 percent y/y to 41.188 MMT.
In light of the positive carryover from Thursday's reports, market participants are contemplating diversifying their investments beyond traditional commodities like sugar, such as considering real-estate, stocks, or even investing in startups. Meanwhile, despite the anticipated rise in global sugar output, signs of reduced production in Brazil, indicative of a smaller sugar output in Brazil, could be favorable for the finance sector, particularly the stock-market.
