Sugar Market Update: Price Trends and Projections for 2025/26
Recent shifts in the sugar market have prompted a notable decline in prices, with significant developments affecting both New York and London trading. Sugar prices experienced a drop on Wednesday, with New York sugar reaching a nearly four-year low for nearest futures and London sugar falling to a four-month low. This downturn has primarily stemmed from heightened expectations of a global sugar surplus, projected by the USDA in its recent biannual report.
USDA Projections Impacting Sugar Prices
According to the USDA, global sugar production for the 2025/26 period is expected to rise by approximately 4.7% year-over-year, totaling a record of 189.318 million metric tons (MMT). This increase in production is projected to create a global sugar surplus of 41.188 MMT, marking a 7.5% rise from the previous year.
A significant driver behind these projections is Brazil, which is anticipated to boost its sugar production by 2.3% year-over-year, reaching 44.7 MMT. Meanwhile, India is expected to see a more dramatic increase, with a projected rise of 25% year-over-year to 35.3 MMT, thanks to favorable monsoon conditions and expanded sugar cultivation areas. Additionally, Thailand’s production is estimated to grow by 2% to 10.3 MMT, further contributing to the bearish outlook for sugar prices.
Weather Influences and Export Conditions
The anticipated rainy season in India could lead to an abundant sugar crop, further impacting the sugar market. India’s Ministry of Earth Sciences has projected above-normal rainfall for the monsoon season, which lasts from June to September. This increased rainfall could bolster yields significantly.
Nonetheless, a bearish element was introduced when the Indian government announced plans to permit local sugar mills to export 1 MMT of sugar this season. Previously, India imposed restrictions on sugar exports to ensure domestic supply, allowing only 6.1 MMT of exports during the 2022/23 season after allowing a record 11.1 MMT in the previous period. Despite the current exports, projections indicate a potential decline in India’s sugar production for the 2024/25 season, which is expected to fall by 17.5% to 26.2 MMT.
Regional Sugar Production Trends
In the latest reports, the International Sugar Organization raised its global sugar deficit forecast for 2024/25 to a nine-year high of 5.47 MMT, indicating a tightening market in contrast to a previous surplus seen in 2023/24. The ISO also adjusted its forecast for global sugar production downward to 174.8 MMT, citing various factors influencing crop yields worldwide.
Throughout Brazil, adverse conditions last year exacerbated challenges for sugar production, especially in the key producing state of São Paulo. Drought and excessive heat led to significant crop losses, with estimates suggesting that as much as 5 MMT of sugar cane may have been destroyed. Brazilian crop forecasting agency Conab has projected a decline in sugar production for 2024/25, forecasting a decrease of 3.4% due to these unfavorable conditions.
Looking Ahead: Market Dynamics
As the global sugar market evolves, the interplay between production increases in countries like India and Brazil, along with varying climate impacts, will play a critical role in shaping future prices. The USDA anticipates that global sugar consumption will also rise by 1.4% year-over-year, further complicating the outlook for sugar prices.
With numerous factors at play—from weather to government policies—stakeholders in the sugar market will need to remain vigilant about upcoming trends that could influence their operations. Understanding the dynamics of sugar production and global supply will be essential for navigating the potential challenges and opportunities in the coming seasons.
The current environment underscores the complexity of the sugar market, where regional production levels and climatic conditions can drastically alter price trajectories. As the monsoon season approaches and production forecasts are updated, market participants will have to adapt to the shifting landscape of sugar supply and demand.
