Sugar Prices Post Modest Gains as the Dollar Weakens
Sugar futures rose modestly Monday, with NY up 0.51% and London up 0.25%, rebounding from multi-year lows on a weaker dollar. Prices remain pressured by higher Brazilian, Indian, and Thai output forecasts, though the ISO projects a sixth consecutive global deficit in 2025/26, tempering bearish supply expectations.
October NY world sugar #11 (SBV25) on Monday closed up +0.08 (+0.51%), and October London ICE white sugar #5 (SWV25) closed up +1.20 (+0.25%).
Sugar prices recovered from early losses on Monday and posted modest gains as a weaker dollar (DXY00) sparked some mild short covering in sugar futures.
Sugar prices initially sold off on Monday, with NY sugar posting a 4.25-year nearest-futures low and London sugar falling to a 2.5-week low due to the outlook for higher sugar production in Brazil. On August 29, Unica reported that Brazil’s Center-South sugar output in the first half of August rose by +16% y/y to 3,615 MT. Also, the percentage of sugarcane crushed for sugar by Brazil’s sugar mills in the first half of August increased to 55.00% from 49.15% the same time last year. However, cumulative 2025-26 Center-South sugar output through mid-August is down -4.7% y/y to 22.886 MMT.
Covrig Analytics recently reported that Brazil’s sugar mills are prioritizing sugar production over ethanol, crushing more cane for sugar. This trend is expected to continue as harvesting peaks, driven by drier cane crops that prompt mills to produce more sugar.
On August 9, London sugar rose to a 3.75-month high after the International Sugar Organization (ISO) forecast a global sugar deficit for the 2025/26 season, the sixth consecutive year of sugar deficits. The ISO projects a global 2025/26 sugar deficit of -231,000 MT, improving from a -4.88 MMT shortfall in 2024/25. The 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.
On August 19, Conab, Brazil’s government crop forecasting agency, cut its Brazil 2025/26 production estimate by 3.1% to 44.5 MMT from a previous estimate of 45.9 MMT. In July, Conab reported that 2024/25 Brazil sugar production fell by -3.4% y/y to 44.118 MMT, citing lower sugarcane yields due to drought and excessive heat.
Expectations for abundant sugar supplies are undercutting sugar prices. On June 30, commodities trader Czarnikow projected a 7.5 MMT global sugar surplus for the 2025/26 season, the largest surplus in 8 years. On May 22, the USDA, in its biannual report, projected that global 2025/26 sugar production would increase by +4.7% y/y to a record 189.318 MMT, with global sugar ending stocks at 41.188 MMT, up 7.5% y/y.
The outlook for higher sugar exports from India is negative for sugar prices after Bloomberg reported that India may permit local sugar mills to export sugar in the next season, which starts in October, as abundant monsoon rains may produce a bumper sugar crop. India’s Meteorological Department reported last Thursday that cumulative monsoon rain in India was 791.8 mm as of September 4, or 9% above normal. Also, the Indian Sugar and Bio-energy Manufacturers Association recently said that it will seek permission to export 2 MMT of sugar in 2025/26.
The outlook for higher sugar production in India, the world’s second-largest producer, is bearish for prices. 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 35 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).
The outlook for higher sugar production in Thailand is bearish for sugar prices. 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.
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.
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Source : BarChart
