World No. 11 New York March Sugar (SBH26) closed Friday up +0.39 (+2.68%). London March White Sugar ICE #5 (SWH26) closed up +10.20 (+2.44%).
Sugar prices closed sharply on Friday amid short covering by funds ahead of a three-day weekend in the US, with markets closed on Monday for the Martin Luther King Day holiday.
On Thursday, New York sugar fell to a one-month low and London sugar fell to a two-month low. The strength of India’s sugar production is undercutting prices after the National Federation of Cooperative Sugar Factories Ltd., a group of Indian sugar producers, reported on Thursday that the country’s sugar production in 2025-26 rose to 15.9 million tonnes from October 1 to January 15, up +21% year-on-year.
Higher sugar production in Brazil is also bearish for prices after Unica reported on Tuesday that Central-South Brazil’s cumulative sugar production in 2025-26 through mid-December increased +0.9% year-on-year to 40,158 MMT. Furthermore, the proportion of cane crushed for sugar increased to 50.91% in 2025/36 from 48.19% in 2024/25.
An excessively long position in London ICE white sugar futures could exacerbate any price decline. Friday’s weekly Commitment of Traders (COT) report showed funds increased their white sugar positions by 4,544 net long positions to a record 48,203 (2011 data).
The prospects of a global sugar surplus are weighing on prices. On Monday, Covrig Analytics raised its global sugar surplus estimate for 2025/26 to 4.7 MMT from 4.1 MMT in October. However, Covrig projects that the global sugar surplus in 2026/27 will fall to 1.4 MMT, as weak prices discourage production.
The prospect of lower future sugar supplies from Brazil is a factor supporting prices. Consulting firm Safras & Mercado said on December 23 that Brazil’s sugar production in 2026/27 will fall -3.91% to 41.8 MMT from the expected 43.5 MMT in 2025/26. The firm expects Brazil’s sugar exports in 2026/27 to fall -11% year-on-year to 30 MMT.
Signs of increased sugar production in India are negative for prices. On November 11, the India Sugar Mill Association (ISMA) raised its 2025/26 Indian sugar production estimate to 31 MMT from a previous forecast of 30 MMT, an increase of +18.8% year-on-year. 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 have been under pressure amid prospects for higher sugar exports from India, after India’s food secretary said the government could allow additional sugar exports to reduce domestic oversupply. In November, India’s food ministry said it would allow mills to export 1.5 million tonnes of sugar in the 2025/26 season. India introduced a quota system for sugar exports in 2022/23 after late rains reduced production and limited domestic supplies.
The prospects for record sugar production in Brazil are bearish for prices. Conab, Brazil’s crop forecasting agency, on November 4 raised its 2025/26 Brazilian sugar production estimate to 45 MMT from a previous forecast of 44.5 MMT.
On the bearish side of sugar, the International Sugar Organization (ISO) on November 17 forecast a sugar surplus of 1.625 million MT in 2025-26, after a deficit of 2.916 million MT in 2024-25. ISO said the surplus is due to increased sugar production in India, Thailand and Pakistan. ISO forecasts a +3.2% year-on-year increase in global sugar production to 181.8 million tonnes in 2025-26. Meanwhile, sugar trader Czarnikow on November 5 raised its global sugar surplus estimate for 2025/26 to 8.7 MMT, +1.2 MMT higher than a September estimate of 7.5 MMT.
The prospects for increased sugar production in Thailand are bearish for prices. On October 1, Thai Sugar Millers Corp projected that Thailand’s sugar crop in 2025/26 will increase +5% year-on-year to 10.5 MMT. Thailand is the third largest sugar producer in the world and the second largest exporter.
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
