March NY world sugar #11 (SBH26) on Friday closed down -0.16 (-0.98%), and December London ICE white sugar #5 (SWZ25) closed down -0.70 (-0.16%).
Sugar prices settled lower on Friday, with NY sugar posting a 2.5-week low. Weakness in crude oil (CLX25) and the Brazilian Real (^USDBRL) are weighing on sugar prices. WTI crude sank more than -4% to a 5-month low on Friday, and the real tumbled to a 2-month low against the dollar. Weakness in crude prices undercuts ethanol prices and may prompt the world’s sugar mills to divert more cane crushing toward sugar production rather than ethanol, thus boosting sugar supplies. The weaker real encourages export sales from Brazil’s sugar producers.
Sugar prices were already on the defensive, with London falling to a four-year nearest-futures low on Thursday. Sugar prices have been under pressure this week due to a negative carryover from Tuesday, when Covrig Analytics projected a global sugar surplus of +4.1 MMT for the 2025/26 season.
Sugar prices have ratcheted lower over the past seven months, with NY sugar posting a 4.5-year nearest-futures low (SBV25) last month on signs of higher sugar output in Brazil. Last Thursday, Unica reported that Brazil’s Center-South sugar output in the first half of September rose by +15.7% y/y to 3.622 MT. Also, the percentage of sugarcane crushed for sugar by Brazil’s sugar mills in the second half of August increased to 53.49% from 47.74% the same time last year. However, cumulative 2025-26 Center-South sugar output through mid-September fell -0.1% y/y to 30.388 MMT.
The outlook for higher sugar exports from India is negative for sugar prices, as abundant monsoon rains may produce a bumper sugar crop. India’s Meteorological Department reported last Tuesday that the cumulative monsoon rain in India as of September 30 was 937.2 mm, 8% above normal and the strongest monsoon in 5 years. On June 2, India’s National Federation of Cooperative Sugar Factories projected that India’s 2025/26 sugar production would climb +19% y/y to 34.9 MMT, citing larger planted cane acreage. That would follow a -17.5% y/y decline in India’s sugar production in 2024/25 to a 5-year low of 26.2 MMT, according to the Indian Sugar Mills Association (ISMA).
Another bearish factor for sugar was the recent assertion from sugar trader Sucden that India may divert 4 MMT of sugar to make ethanol in 2025/26, which is not enough to ease the country’s sugar surplus and may prompt India’s sugar mills to export as much as 4 MMT of sugar, above earlier expectations of 2 MMT. India is the world’s second-largest producer of sugar.
The outlook for higher sugar production in Thailand is bearish for prices after the Thai Sugar Miller Corp projected last Wednesday that Thailand’s 2025/26 sugar crop will increase by +5% y/y to 10.5 MMT. On May 2, Thailand’s Office of the Cane and Sugar Board reported that Thailand’s 2024/25 sugar production rose +14% y/y to 10.00 MMT. Thailand is the world’s third-largest sugar producer and the second-largest exporter of sugar.
On Tuesday, NY sugar posted a 1.75-month high as signs of lower sugar content from this year’s Brazil sugar crush sparked a brief bout of short covering in sugar futures. Last Thursday, Unica reported that the sugar content in Brazil’s Center-South sugarcane crushed cane in the first half of September dropped to 154.58 kilograms per ton (kg/ton) compared to 160.07 kg/ton in the same period a year earlier.
On August 29, the International Sugar Organization (ISO) forecast a global sugar deficit for the 2025/26 season, the sixth consecutive year of sugar deficits. ISO projects a global 2025/26 sugar deficit of -231,000 MT, down from the -4.88 MMT shortfall in 2024/25. ISO also projects 2025/26 global sugar production will rise by +3.3% y/y to 180.6 MMT, and 2025/26 global sugar consumption will increase +0.3% y/y to 180.8 MMT.
The USDA, in its bi-annual report released May 22, projected that global 2025/26 sugar production would climb +4.7% y/y to a record 189.318 MMT and that global 2025/26 human sugar consumption would increase +1.4% y/y to a record 177.921 MMT. The USDA also forecasted that 2025/26 global sugar ending stocks would climb +7.5% y/y to 41.188 MMT. The USDA’s Foreign Agricultural Service (FAS) predicted that Brazil’s 2025/26 sugar production would rise +2.3% y/y to a record 44.7 MMT FAS predicted that India’s 2025/26 sugar production would rise +25% y/y to 35.3 MMT due to favorable monsoon rains and increased sugar acreage. FAS predicted that Thailand’s 2025/26 sugar production will climb +2% y/y to 10.3 MMT.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
