Higher sugar production in Brazil drives prices down

Sugar Market Update: Mixed Price Movements

March futures for New York world sugar #11 (SBH26) slipped by 0.02 points, or 0.13%, while March London ICE white sugar #5 (SWH26) gained 2.00 points, up 0.47%.

Factors Influencing Sugar Prices

Sugar prices are showing a mixed trend today. Increased sugar output in Brazil is weighing on the market, following Unica's report that Brazil's Center-South region produced 40.158 million metric tons (MMT) of sugar through mid-December for the 2025-26 season, a 0.9% increase from the previous year. Additionally, the proportion of sugarcane processed for sugar rose to 50.91% for 2025/26, compared to 48.19% in 2024/25.

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Market Sentiment and Forecasts

Earlier this week, sugar prices faced downward pressure after Covrig Analytics increased its forecast for the global sugar surplus in 2025/26 to 4.7 MMT, up from 4.1 MMT in October. However, the downside was limited as Covrig expects the surplus to shrink to 1.4 MMT in 2026/27, with lower prices likely discouraging production.

Anticipated index-driven purchases of sugar futures for the annual commodity index rebalancing are also providing support. Citigroup estimates that the BCOM and S&P GSCI indexes—the two largest commodity benchmarks—will inject $1.2 billion into sugar futures this week as part of their rebalancing process.

Brazil and India: Key Producers Impacting Prices

Expectations for reduced sugar output from Brazil in the future are lending support to prices. According to Safras & Mercado, Brazil's sugar production is projected to decline by 3.91% to 41.8 MMT in 2026/27, down from an estimated 43.5 MMT in 2025/26. Sugar exports from Brazil are also expected to drop by 11% year-over-year to 30 MMT in 2026/27.

Conversely, robust sugar production in India is putting downward pressure on prices. The India Sugar Mill Association (ISMA) reported that Indian sugar output for 2025-26, covering October 1 to December 31, surged by 25% year-over-year to 11.90 MMT, up from 9.54 MMT a year earlier. On November 11, ISMA raised its 2025/26 production forecast for India to 31 MMT, an 18.8% increase from the previous year. The association also reduced its estimate for sugar allocated to ethanol production to 3.4 MMT, down from a July forecast of 5 MMT, potentially enabling higher sugar exports. India remains the world’s second-largest sugar producer.

Indian sugar prices are also under pressure due to the possibility of increased exports. The country’s food secretary indicated that the government may approve additional sugar exports to address a domestic surplus. In November, the food ministry announced that mills would be permitted to export 1.5 MMT of sugar for the 2025/26 season. India implemented export quotas in 2022/23 after late-season rains curtailed production and tightened domestic supplies.

Global Production and Surplus Outlook

Expectations for record-high sugar output in Brazil are negative for prices. On November 4, Brazil's crop agency Conab raised its 2025/26 sugar production estimate to 45 MMT, up from a previous forecast of 44.5 MMT.

The International Sugar Organization (ISO) projected on November 17 that the global sugar market will see a surplus of 1.625 million MT in 2025-26, following a deficit of 2.916 million MT in 2024-25. This surplus is attributed to increased production in India, Thailand, and Pakistan. ISO anticipates global sugar output will rise by 3.2% year-over-year to 181.8 million MT in 2025-26. Meanwhile, sugar trader Czarnikow raised its global surplus estimate for 2025/26 to 8.7 MMT, up by 1.2 MMT from its September forecast.

Thailand is also expected to see higher sugar production, with the Thai Sugar Millers Corp forecasting a 5% year-over-year increase to 10.5 MMT for the 2025/26 season. Thailand ranks as the world’s third-largest sugar producer and second-largest exporter.

The USDA’s bi-annual report, released December 16, projects global sugar production for 2025/26 will reach a record 189.318 MMT, a 4.6% increase year-over-year. Human consumption is expected to climb 1.4% to a record 177.921 MMT, while global ending stocks are forecast to decline by 2.9% to 41.188 MMT. The USDA’s Foreign Agricultural Service (FAS) expects Brazil’s sugar output to rise by 2.3% to a record 44.7 MMT, India’s production to jump 25% to 35.25 MMT due to favorable monsoon conditions and expanded acreage, and Thailand’s output to grow by 2% to 10.25 MMT.