Plummeting sugar prices reach a four-year low due to an excess of worldwide sugar supplies.
In the world of sugar, the forecast for the upcoming 2025/26 season is painting a picture of abundant supplies, with the United States Department of Agriculture (USDA) projecting a +4.7% year-on-year (y/y) increase in global sugar production to a record 189.318 million metric tons (MMT).
One of the key contributors to this increase is Brazil, the largest exporter of sugar for the 2025/26 period. The USDA predicts a +2.3% y/y increase in Brazil's sugar production, reaching a record 44.7 MMT. In the second half of August, Brazil's Center-South sugar output rose by +18% y/y to 3.872 MT, and the percentage of sugarcane crushed for sugar by sugar mills increased to 54.20%, up from 48.78% the same time last year.
Thailand, another significant player in the global sugar market, is projected to have a +2% y/y increase in 2025/26 sugar production to 10.3 MMT. Thailand's 2024/25 sugar production already rose +14% y/y to 10.00 MMT.
India, the second-largest sugar producer, is expected to see a +25% y/y increase in its 2025/26 sugar production due to favorable monsoon rains and increased sugar acreage. India's 2025/26 sugar production is projected to climb +19% y/y to 34.9 MMT, according to the National Federation of Cooperative Sugar Factories. With this increase, India may divert 4 MMT of sugar to make ethanol, which could prompt India's sugar mills to export as much as 4 MMT of sugar.
The outlook for these abundant sugar supplies is bearish for sugar prices. Over the past six months, sugar prices have been in a downtrend due to expectations of higher sugar production in Brazil. This downtrend has continued, with sugar prices slumping to a 4.25-year nearest-futures low in New York and a 4-year low in London. As of September 9, funds have boosted their net-short positions in New York sugar futures to 182,608, the most in almost 6 years.
The International Sugar Organization forecasts a global sugar deficit for the 2025/26 season, the sixth consecutive year of sugar deficits. Despite the deficit, the USDA expects global sugar ending stocks to rise +7.5% y/y to 41.188 MMT.
As the global sugar market prepares for another year of increased production, the question remains: Will the abundant supplies be enough to offset the ongoing demand, or will the deficit persist? Only time will tell.
