Sugar costs see a significant drop as increased sugar production in Brazil drives the market downwards
The global sugar market is expected to witness significant changes in the upcoming 2025/26 season, according to various forecasts and reports. Here are some key developments that are shaping the market:
The United States Department of Agriculture (USDA) forecasted a rise in global human sugar consumption for the 2025/26 season, projecting a 1.4% year-on-year (y/y) increase to a record 177.921 MMT on May 22.
On the other hand, commodities trader Czarnikow projected a global sugar surplus for the same season, with a projection of 7.5 MMT, marking the largest surplus in 8 years.
Investors have shown a bearish sentiment towards the sugar market, as funds boosted their net-short positions in NY sugar futures by 32,849 to 182,608 in the week ended September 9.
The outlook for higher sugar production in major sugar-producing countries is contributing to the bearish sentiment. For instance, India's National Federation of Cooperative Sugar Factories projected a 19% y/y increase in 2025/26 sugar production to 34.9 MMT on June 2. Similarly, Thailand's 2024/25 sugar production rose by 14% y/y to 10.00 MMT, according to the Office of the Cane and Sugar Board on May 2.
However, Brazil, another major sugar-producing country, has seen a decline in sugar production. Conab reported that 2024/25 Brazil sugar production fell by 3.4% y/y to 44.118 MMT in July, citing lower sugarcane yields due to drought and excessive heat. Despite this, the Brazilian government crop forecasting agency, Conab, cut its 2025/26 production estimate by 3.1% to 44.5 MMT on August 19.
The USDA's Foreign Agricultural Service (FAS) predicted a recovery in Brazil's sugar production for the 2025/26 season, with a forecast of a +2.3% y/y increase to a record 44.7 MMT.
The International Sugar Organization forecast a global sugar deficit for the 2025/26 season, marking the sixth consecutive year of sugar deficits.
In response to the increased production, the Indian Sugar and Bio-energy Manufacturers Association requested permission to export 2 MMT of sugar in the 2025/26 season.
Interestingly, Brazil's sugar mills are prioritizing sugar production over ethanol, crushing more cane for sugar. This shift in focus could further impact the global sugar market.
Sugar prices have been on the defensive due to potential increased sugar exports from India, with December London ICE white sugar (SWZ25) closing down 1.44% on Wednesday, and October NY world sugar (SBV25) closing down 2.26% on the same day.
The leading sugar producers for the 2025/26 marketing year include major sugar beet and sugarcane producing countries. The USDA predicts that Brazil, India, and Thailand will be the top producers, with Germany contributing significantly within Europe.
This dynamic global sugar market is a complex interplay of various factors, and these developments are just a glimpse into the trends shaping the market for the 2025/26 season.
