Greater sugar production in India puts pressure on prices

The No. 11 New York May World Sugar (SBK26) closed Thursday down -0.29 (-1.90%), and the No. 5 London ICE May White Sugar (SWK26) closed down -6.40 (-1.45%).

Sugar prices fell to two-week lows on Thursday and stabilized sharply lower. Underpriced sugar production in India was increased on Thursday after the National Federation of Cooperative Sugar Factories Ltd. of India reported that India’s sugar production in 2025-26 from October 1 to March 31 increased +9% year-on-year to 27.12 million tonnes.

Increased sugar production in Brazil is also bearish for sugar prices. Last Friday, Unica reported that the Central-South’s cumulative sugar production in 2025-26 (October to mid-March) increased +0.7% year-on-year to 40.25 MMT, with sugar mills increasing the amount of cane crushed for sugar to 50.61% from 48.08% last year.

On Monday, New York sugar rose to a 5.5-month high and London sugar rose to a 6-month high, boosted by strength in crude oil (CLK26) prices. Crude oil rose to a 3.75-year high last month, boosting ethanol prices and potentially encouraging the world’s sugar mills to increase ethanol production and curb sugar production.

Sugar prices are also receiving some support amid supply disruptions resulting from the closure of the Strait of Hormuz. According to Covrig Analytics, the closure of the strait has slowed about 6% of global sugar trade, limiting refined sugar production.

Last month, sugar prices fell to 5.5-year lows in futures on concerns that a global sugar surplus persists. On February 11, analysts at sugar trader Czarnikow said they expect a global sugar surplus of 3.4 MMT in the 2026/27 agricultural year, following a surplus of 8.3 MMT in 2025/26. Additionally, Green Pool Commodity Specialists said on January 29 that they expect a global sugar surplus of 2.74 MMT by 2025/26 and a surplus of 156,000 MT by 2026/27. Meanwhile, StoneX said on February 13 that it expects a global sugar surplus of 2.9 MMT in 2025/26.

On February 27, the International Sugar Organization (ISO) forecast a sugar surplus of +1.22 million metric tonnes (million metric tonnes) in 2025-26, following a deficit of -3.46 million tonnes in 2024-25. ISO said the surplus is due to increased sugar production in India, Thailand and Pakistan. ISO forecasts a +3.0% year-on-year increase in global sugar production to 181.3 million tonnes in 2025-26.

On March 11, the Indian Sugar and Bioenergy Manufacturers Association (ISMA) projected India’s sugar production for 2025/26 at 29.3 million tonnes, up 12% year-on-year, down from a previous projection of 30.95 million tonnes. The ISMA also lowered its estimate for sugar used for ethanol production in India to 3.4 MMT from a July forecast of 5 MMT, which could allow India to increase its sugar exports. India is the second largest sugar producer in the world.

Sugar prices are coming down amid prospects of higher sugar exports from India. On February 13, the Indian government approved an additional 500,000 MT of sugar for export for the 2025/26 season, in addition to the 1.5 MMT approved in November. India introduced a quota system for sugar exports in 2022/23 after late rains reduced production and limited domestic supplies.

The USDA, in its semi-annual report released on December 16, projected that global sugar production in 2025/26 would increase +4.6% year-on-year to a record 189,318 MMT and that global human sugar consumption in 2025/26 would increase +1.4% year-on-year to a record 177,921 MMT. The USDA also forecast that global sugar ending stocks in 2025/26 would fall -2.9% year-on-year to 41.188 million tonnes. The USDA’s Foreign Agricultural Service (FAS) predicted that Brazil’s sugar production in 2025/26 would increase 2.3% year-on-year to a record 44.7 million tons. FAS also predicted that India’s sugar production in 2025/26 would rise 25% year-on-year to 35.25 MMT, driven by favorable monsoon rains and increase in sugar acreage. Additionally, FAS predicted that Thailand’s sugar production in 2025/26 will increase +2% year-on-year to 10.25 MMT.

On the date of publication, Rich Asplund had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com