Global sugar market could shift from surplus to deficit due to lower Brazilian production
S&P Global Energy CERA has revised its MY 2025/26 global sugar balance from a 1.36-million-tonne surplus to a 540,000-tonne deficit, citing excessive rainfall disrupting Brazil’s Center-South crushing operations. Tightening supply concerns lifted Thai raw sugar prices to a 22-month high, although weak demand and speculative buying may increase volatility.
The global sugar market could shift from a surplus to a deficit in the MY 2025/26 due to deteriorating production prospects in Brazil. Analysts at S&P Global Energy CERA have revised their global sugar balance forecast from a surplus of 1.36 mln tons to a deficit of 540 thsd tons. This represents a 1.9 mln ton downward revision in global supply relative to consumption. The main reason for the adjustment was persistent rainfall in Brazil’s Center-South region, which significantly disrupted sugarcane harvesting and crushing operations in September, S&P Global reports.
Brazil remains one of the world’s largest sugar producers and exporters, meaning that any reduction in its output has a direct impact on the global balance. According to market participants, sugar production in the country’s Center-South region could reach approximately 37–37.2 mln tons. Analysts have already lowered their forecasts due to excessive rainfall, which has disrupted sugar mill operations. However, the final production losses remain uncertain, as improving weather conditions later in the season could allow sugarcane crushing activity to partially recover.
Concerns over tightening supplies have already affected global prices. On October 15, Thai HiPol raw sugar prices reached their highest level in 22 months, since December 2024. Meanwhile, March raw sugar futures on ICE New York rose to 20.84 cents/lb, gaining 2.57 cents from the previous month. Rising prices in Thailand indicate that production problems in Brazil are influencing market expectations and prices offered by other major sugar exporters.
However, not all market participants believe that the revised global balance forecast signals the emergence of a sustained sugar deficit. According to Asian traders, the recent price increase has been driven largely by active futures buying by investment funds amid concerns over the potential impact of El Niño. Meanwhile, demand in the physical market remains subdued, with no significant recovery in purchasing activity. In Thailand, premiums for raw sugar shipments scheduled for March–May 2027 declined by 5 points over the week.
Further developments in the global sugar market will depend primarily on actual sugarcane crushing results in Brazil and the potential recovery in production once excessive rainfall subsides. If the projected decline in Brazilian output materializes, a shift in the global balance toward a deficit could support international sugar prices. At the same time, weak demand and the significant influence of investment funds on futures prices create a risk of price volatility. As a result, market participants remain cautious about the prospects for further increases in sugar prices.
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Source : Ukr Agro Consult
