Current Trends in Sugar Prices
Overview of Sugar Price Movements
Sugar prices have shown a mixed trend recently, with fluctuations in market dynamics impacting futures. The most recent reports indicate that sugar futures experienced short-covering as key developments unfolded globally. For instance, the announcement from the Pakistani government regarding its plan to import 250,000 metric tons of raw sugar has prompted market reactions due to unfavorable local harvest outcomes. Additionally, a weaker dollar has also contributed to this market behavior.
Recent Sugar Production Insights
Over the past few months, sugar prices have faced downward pressure, hitting four-year lows due to expectations of a global surplus. The U.S. Department of Agriculture (USDA) recently projected an increase in global sugar production for the 2025/26 season, estimating a rise of 4.7% year-over-year (y/y) to reach an unprecedented total of 189.318 million metric tons (MMT). This production surge is expected to lead to a surplus of 41.188 MMT, up 7.5% from previous figures.
India’s Sugar Production Outlook
The forecast for increased sugar production in India, the world’s second-largest producer, may negatively influence prices. According to the National Federation of Cooperative Sugar Factories in India, sugar production for the 2025/26 season is anticipated to rise by 19% y/y, reaching around 35 MMT, credited to expanded planting areas. With predictions of above-normal monsoon rains this year, expectations are for a bumper sugar crop, which generally puts downward pressure on prices. The Indian monsoon season, spanning from June to September, is projected to see rainfall at around 105% of the long-term average.
Global Production Forecasts
Global output predictions further complicate the market landscape. The USDA’s Foreign Agricultural Service has estimated that Brazil’s sugar production for the upcoming season will increase by 2.3% y/y, reaching a record 44.7 MMT. Additionally, production in Thailand is expected to increase to 10.3 MMT, marking a rise of 2% y/y. These forecasts present a bleak scenario for sugar prices, driven by expectations of sufficient supplies.
India’s Export Policy Changes
One potential pressure point on prices comes from policy shifts in India. Recently, the Indian government announced it would permit exports of 1 MMT of sugar for the current season, lifting restrictions that were imposed to secure domestic supplies. Previously, sugar exports were limited significantly from October 2023 onwards, with only 6.1 MMT allowed during the 2022/23 season, compared to a record 11.1 MMT the year before. However, the Indian Sugar Mills Association (ISMA) has projected a potential decline in production for 2024/25 to 26.2 MMT, marking a significant 17.5% decrease y/y. Furthermore, up until mid-May, India’s sugar production was recorded at 25.74 MMT, down 17% from the previous year.
Thailand’s Production Growth
Supporting the bearish outlook, Thailand’s Office of the Cane and Sugar Board revealed that the country’s sugar production for the 2024/25 season increased by 14% y/y to 10.00 MMT. As the world’s third-largest sugar producer and second-largest exporter of sugar, Thailand’s growth adds pressure on global prices.
Brazil’s Production Challenges
Conversely, sugar prices may be buoyed somewhat by a decrease in sugar production in Brazil. The Brazilian sugar industry has reported a cumulative drop in production of 11.6% y/y, amounting to 6.954 MMT through May for the 2025/26 season. The government crop forecasting agency, Conab, also indicated a decline of 3.4% y/y in Brazil’s total sugar production to 44.118 MMT for the 2024/25 season, attributing this downturn to unfavorable weather conditions, such as drought and excessive heat.
Global Sugar Market Dynamics
The International Sugar Organization (ISO) has recently revised its forecast for the global sugar deficit, predicting it will reach a nine-year high of 5.47 MMT. This marks a shift from earlier estimates, reflecting a tightening market scenario compared to the previous year’s surplus of 1.31 MMT. Furthermore, ISO has also adjusted its global production figures downward for 2024/25, estimating production at 174.8 MMT, down from previous forecasts.
Future Projections
In its latest report, the USDA reiterated its projection for a global increase in sugar production, forecasting a new record for the 2025/26 season at 189.318 MMT. In parallel, global human sugar consumption is anticipated to rise by 1.4% y/y to 177.921 MMT, leading to an increase in ending stocks of 7.5% y/y to 41.188 MMT.
By keeping these important factors in mind, stakeholders and market participants can better navigate the complexities of the sugar market, adapting to ongoing changes in production, trade policies, and global supply dynamics.
