Sugar Prices Rise as Evidence Shows Falling Costs Are Boosting Demand

Sugar Market Update: Mixed Performance and Shifting Global Dynamics

March NY world sugar #11 (SBH26) saw a rise of +0.14 (+1.02%) today, while May London ICE white sugar #5 (SWK26) slipped by -2.30 (-0.57%).

Sugar prices are showing a mixed trend as they stabilize above the lowest levels seen in over five years. Some short covering has emerged, with evidence that the recent price drop is beginning to stimulate buying interest. Several Asian exporters have reported increased demand as buyers replenish stocks following Ramadan.

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Recent Market Developments

Last Thursday, sugar prices continued their downward trajectory, reaching the lowest point for nearest-futures in more than five years, capping a five-month slide. Persistent concerns about a global surplus have weighed heavily on the market. Czarnikow analysts forecast a worldwide sugar surplus of 3.4 million metric tons (MMT) for the 2026/27 season, following an 8.3 MMT surplus in 2025/26. Green Pool Commodity Specialists, as of January 29, project a 2.74 MMT surplus for 2025/26 and a 156,000 MT surplus for 2026/27. StoneX also anticipates a 2.9 MMT global surplus in 2025/26.

According to Unica, Brazil's Center-South region produced 40.236 MMT of sugar through mid-January for the 2025-26 season, marking a 0.9% year-over-year increase. The proportion of cane processed for sugar rose to 50.78% in 2025/36, up from 48.15% in the previous year.

The India Sugar Mill Association (ISMA) reported on January 19 that India's sugar production from October 1 to January 15 for the 2025-26 season climbed 22% year-over-year to 15.9 MMT. On November 11, ISMA raised its 2025/26 production forecast to 31 MMT, an 18.8% increase from the prior year, thanks to the strongest monsoon in five years. ISMA also reduced its estimate for sugar used in ethanol production to 3.4 MMT, down from 5 MMT, potentially freeing up more sugar for export. India remains the world's second-largest sugar producer.

Expectations of increased Indian sugar exports are putting further pressure on prices. Last Friday, the Indian government approved an additional 500,000 MT of sugar for export for the 2025/26 season, supplementing the 1.5 MMT approved in November. India implemented an export quota system in 2022/23 after late-season rains curtailed output and tightened domestic supplies.

Global Sugar Supply and Demand Outlook

Covrig Analytics, on December 12, raised its estimate for the 2025/26 global sugar surplus to 4.7 MMT, up from 4.1 MMT in October. However, the firm expects the surplus to shrink to 1.4 MMT in 2026/27 as low prices discourage production.

Brazil's record sugar output is expected to weigh on prices. Conab, the country's crop forecasting agency, increased its 2025/26 sugar production estimate to 45 MMT in November, up from a previous forecast of 44.5 MMT.

Looking ahead, a reduction in Brazil's sugar output could support prices. Safras & Mercado predicts that Brazil's sugar production will decrease by 3.91% to 41.8 MMT in 2026/27, down from 43.5 MMT expected in 2025/26, with exports projected to fall by 11% to 30 MMT.

On the bearish side, the International Sugar Organization (ISO) projected a 1.625 million MT surplus for 2025-26, following a deficit of 2.916 million MT in 2024-25. This surplus is attributed to higher production in India, Thailand, and Pakistan. ISO expects global sugar output to rise by 3.2% year-over-year to 181.8 million MT in 2025-26. Czarnikow also raised its global surplus estimate for 2025/26 to 8.7 MMT in November, up by 1.2 MMT from its September forecast.

Thailand's sugar production is also expected to increase, further pressuring prices. The Thai Sugar Millers Corp forecasts a 5% year-over-year rise in the 2025/26 crop to 10.5 MMT. Thailand is the world's third-largest sugar producer and the second-largest exporter.

According to the USDA's bi-annual report released on December 16, global sugar production for 2025/26 is projected to reach a record 189.318 MMT, a 4.6% year-over-year increase. Human consumption is also expected to hit a record 177.921 MMT, up 1.4%. The USDA anticipates global ending stocks to fall by 2.9% to 41.188 MMT. The USDA's Foreign Agricultural Service (FAS) forecasts Brazil's 2025/26 sugar output will rise by 2.3% to a record 44.7 MMT, while India's production is expected to jump 25% to 35.25 MMT, driven by favorable weather and expanded acreage. Thailand's output is also set to grow by 2% to 10.25 MMT.