October NY world sugar #11 (SBV25) today is up +0.23 (+1.51%), and December London ICE white sugar #5 (SWZ25) is up +8.40 (+1.86%).
Sugar prices recovered from early losses today and moved sharply higher after a +2% rally in crude oil prices (CLX25) sparked short covering in sugar futures. Stronger crude prices benefit ethanol prices and could prompt global sugar mills to divert more cane crushing toward ethanol production rather than sugar, thus curbing sugar supplies.
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Sugar price initially moved lower today, NY sugar posting a 4.25-year nearest-futures low and London sugar posting a new 4-year low. Sugar prices have been declining over the past six months, driven by signs of abundant global sugar supplies. StoneX today projected a global sugar surplus of +2.8 MMT for the upcoming 2025/26 season, switching from a deficit of -4.7 MMT in the 2024/25 season.
Higher sugar output in Brazil is negative for prices. Last Wednesday, Unica reported that Brazil's Center-South sugar output in the second half of August rose by +18% y/y to 3.872 MT. Also, the percentage of sugarcane crushed for sugar by Brazil's sugar mills in the second half of August increased to 54.20% from 48.78% the same time last year. However, cumulative 2025-26 Center-South sugar output through August fell -1.9% y/y to 26.758 MMT.
Another bearish factor for sugar was last Tuesday's assertion from sugar trader Sucden that India may divert 4 MMT of sugar to make ethanol in 2025/26, which is not enough to ease the country's sugar surplus and may prompt India's sugar mills to export as much as 4 MMT of sugar, above earlier expectations of 2 MMT. India is the world's second-largest sugar producer.
On August 29, the International Sugar Organization (ISO) forecast a global sugar deficit for the 2025/26 season, the sixth consecutive year of sugar deficits. The ISO projects a global 2025/26 sugar deficit of -231,000 MT, improving from a -4.88 MMT shortfall in 2024/25. The ISO also projects 2025/26 global sugar production will rise by +3.3% y/y to 180.6 MMT, and 2025/26 global sugar consumption will increase +0.3% y/y to 180.8 MMT.
Expectations for abundant sugar supplies are bearish for prices. On June 30, commodities trader Czarnikow projected a 7.5 MMT global sugar surplus for the 2025/26 season, the largest surplus in 8 years. On May 22, the USDA, in its biannual report, projected that global 2025/26 sugar production would increase by +4.7% y/y to a record 189.318 MMT, with global sugar ending stocks at 41.188 MMT, up 7.5% y/y.
The outlook for higher sugar exports from India is negative for sugar prices, as abundant monsoon rains may produce a bumper sugar crop. India's Meteorological Department reported Monday that cumulative monsoon rain in India was 893.8 mm as of September 22, or 7% above normal.
The outlook for higher sugar production in India is bearish for prices. On June 2, India's National Federation of Cooperative Sugar Factories projected that India's 2025/26 sugar production would climb +19% y/y to 34.9 MMT, citing larger planted cane acreage. That would follow a -17.5% y/y decline in India's sugar production in 2024/25 to a 5-year low of 26.2 MMT, according to the Indian Sugar Mills Association (ISMA).
The outlook for higher sugar production in Thailand is bearish for sugar prices. On May 2, Thailand's Office of the Cane and Sugar Board reported that Thailand's 2024/25 sugar production rose +14% y/y to 10.00 MMT. Thailand is the world's third-largest sugar producer and the second-largest exporter of sugar.
On August 19, Conab, Brazil's government crop forecasting agency, cut its Brazil 2025/26 production estimate by 3.1% to 44.5 MMT from a previous estimate of 45.9 MMT. In July, Conab reported that 2024/25 Brazil sugar production fell by -3.4% y/y to 44.118 MMT, citing lower sugarcane yields due to drought and excessive heat.
The USDA, in its bi-annual report released May 22, projected that global 2025/26 sugar production would climb +4.7% y/y to a record 189.318 MMT and that global 2025/26 human sugar consumption would increase +1.4% y/y to a record 177.921 MMT. The USDA also forecasted that 2025/26 global sugar ending stocks would climb +7.5% y/y to 41.188 MMT. The USDA's Foreign Agricultural Service (FAS) predicted that Brazil's 2025/26 sugar production would rise +2.3% y/y to a record 44.7 MMT FAS predicted that India's 2025/26 sugar production would rise +25% y/y to 35.3 MMT due to favorable monsoon rains and increased sugar acreage. FAS predicted that Thailand's 2025/26 sugar production will climb +2% y/y to 10.3 MMT.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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