ISO cuts 2025-26 global sugar surplus estimate to 1.1 million tonnes
The ISO cut its 2025-26 global sugar surplus forecast to 1.1 million tonnes from 2.2 million, citing weaker Brazilian output. For 2026-27, it projects a 0.2-million-tonne deficit as consumption rises. El Niño remains a key risk, while higher Brazil sugar production and tighter Indian ethanol diversion could influence prices and global supplies.
The International Sugar Organization (ISO) has lowered its estimate for the 2025-26 global sugar surplus to 1.1 million tonnes, down from 2.2 million tonnes projected in May, according to its Quarterly Market Outlook released for August 2026.
The downward revision, the fourth for the crop year, was driven mainly by lower-than-expected sugar production in Centre/South Brazil during the first half of the 2026 harvest, the ISO said in the report. This was partly offset by higher output in China, which the organisation estimated at close to 13 million tonnes, the highest level since 2013-14.
For 2026-27, the ISO’s first detailed estimate points to a small production deficit of 0.2 million tonnes, with global consumption forecast to rise by 0.5 per cent, or 0.9 million tonnes, to 179.6 million tonnes in 2025-26 and by a further 0.8 million tonnes to 180.4 million tonnes in 2026-27. Production outside Brazil is expected to fall by around 4.4 million tonnes, led by declines in the European Union, Thailand and Central America, though this is likely to be offset by a higher sugar mix in Brazil’s 2027 cane crushing campaign, as the recent rally in sugar futures has made sugar production more attractive than ethanol, the ISO said.
The ISO flagged El Niño, potentially among the strongest on record, as the biggest risk to its production forecasts, warning that wetter conditions could constrain output or that a shift in relative prices could tilt Brazil’s cane mix back toward ethanol. Despite the projected production deficit for 2026-27, the organisation estimated a trade surplus of 1.3 million tonnes for the October 2026 to September 2027 period, reflecting elevated stocks in the European Union and Egypt that could be drawn down to offset lower domestic output.
On prices, the ISO noted that raw sugar values rallied sharply in August, with the average monthly ISA Daily Price climbing to 17.4 cents per pound as speculative funds built long positions on growing concerns over the developing El Niño event. The organisation said the rally appeared premature relative to current fundamentals, but cautioned that any deterioration in 2026-27 production could quickly push the global balance into a significant deficit, providing a rationale for higher prices.
The report also noted that Indian domestic sugar prices hit record highs during the quarter on concerns over tight supplies in the intercrop period, prompting the issuance of import permits. On ethanol, the ISO revised India’s 2026 fuel ethanol production down by 0.75 billion litres to 11.3 billion litres, citing constraints from the blending mandate rather than capacity, while sugar diversion to ethanol in India is expected to fall sharply to 1 million tonnes in the coming season, from 2.8 million tonnes previously.
Globally, fuel ethanol production is projected to rise 6.0 per cent to 130.1 billion litres in 2026, against consumption of 127.0 billion litres, leaving a surplus of 3.1 billion litres, the ISO said. Brazil moved to a 32 per cent ethanol blend (E32) from August 1, 2026, adding an estimated 1 billion litres a year to domestic demand, even as the country’s hydrous-to-gasohol price ratio fell to 61.5 per cent in July, its lowest level since September 2018.
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Source : ChiniMandi
