Global Sugar Supplies Expected to Surge, Prices Tumble Amid Bumper Harvests

Sugar prices fall on Monday due to expectations of a global sugar surplus. October NY world sugar #11 closed down -0.27 (-1.63%), and August London ICE white sugar #5 closed down -14.90 (-3.08%). The outlook for higher sugar production in India and abundant rainfall is bearish for prices. The USDA projects global 2025/26 sugar production to increase by +4.7% y/y to a record 189.318 million metric tons, with global sugar ending stocks at 41.188 MMT, up 7.5% year-over-year.

Sugar prices experienced a significant drop on Monday, driven by expectations of a global surplus. The October NY world sugar #11 contract closed down by -0.27 (-1.63%), while the August London ICE white sugar #5 contract fell by -14.90 (-3.08%). These declines were largely attributed to projections of higher sugar production, particularly in India, and favorable weather conditions that are likely to boost crop yields.

The outlook for India's sugar production is particularly bearish for prices. The National Federation of Cooperative Sugar Factories projected that India's 2025/26 sugar production would climb by +19% y/y to 35 MMT, citing larger planted cane acreage and abundant rainfall. The Ministry of Earth Sciences forecast an above-normal monsoon for the year, with total rainfall expected to be 105% of the long-term average. These factors suggest a bumper sugar crop, which is negative for prices.

Additionally, the USDA projects global 2025/26 sugar production to increase by +4.7% y/y to a record 189.318 million metric tons, with global sugar ending stocks at 41.188 MMT, up 7.5% year-over-year. This substantial increase in supply is expected to put downward pressure on prices.

Furthermore, the International Sugar Organization (ISO) raised its 2024/25 global sugar deficit forecast to a 9-year high of -5.47 MMT, indicating a tightening market following the 2023/24 global sugar surplus of 1.31 MMT. This suggests that the market is adjusting to the new supply dynamics.

While there are some supportive factors, such as reduced sugar production in Brazil, the overall outlook remains bearish. Unica reported that the cumulative 2025/26 Brazil Center-South sugar output through June is down by -14.3% y/y to 12.249 MMT, citing lower sugarcane yields due to drought and excessive heat. However, this decrease in Brazilian production is not enough to offset the significant increases in production from other major producers like India and Brazil.

In summary, sugar prices are expected to remain under pressure due to the anticipated global sugar surplus and higher production forecasts. Investors and financial professionals should monitor the market closely for any changes in production estimates or weather conditions that could impact the supply and demand dynamics.

References:
[1] https://www.nasdaq.com/articles/expectations-global-sugar-surplus-continue-weigh-prices
[2] https://www.nasdaq.com/articles/sugar-prices-higher-usda-curbs-specialty-sugar-imports