New York March 11 World Sugar (SBH26) is up +0.04 (+0.27%) today. London March ICE #5 white sugar (SWH26) was down -0.50 (-0.12%).
Sugar prices recovered from initial losses today and are trading mixed. Short covering emerged in sugar futures today after the Brazilian real (^USDBRL) rose to a 1.5-month high against the dollar. The stronger real discourages export sales for Brazil’s sugar producers.
Sugar prices initially fell today due to higher sugar production in Brazil. Unica reported today that Central-South Brazil’s cumulative sugar production in 2025-26 through December increased +0.9% year-on-year to 40,222 MMT. Furthermore, the proportion of cane crushed for sugar increased to 50.82% in 2025/36 from 48.16% in 2024/25.
The prospects of a global sugar surplus are weighing on prices. Last Monday, Covrig Analytics raised its global sugar surplus estimate for 2025/26 to 4.7 million tonnes from 4.1 million tonnes in October. However, Covrig projects that the global sugar surplus in 2026/27 will fall to 1.4 MMT, as weak prices discourage production.
Signs of increased sugar production in India are negative for prices. On Monday, the Indian Sugar Mills Association (ISMA) reported that India’s sugar production in 2025-26 from October 1 to January 15 increased +22% year-on-year to 15.9 MMT. On November 11, 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.
An excessively long position in London ICE white sugar futures could exacerbate any price decline. Last Friday’s weekly Commitment of Traders (COT) report showed that funds increased their net long white sugar positions by 4,544 to a record 48,203 (2011 data).
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.
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
