Sugar prices experienced a modest increase on Wednesday with New York’s world sugar futures (SBK25) rising by 1.94%, equating to a +0.34 boost, and the August London ICE white sugar futures (SWQ25) gaining 1.47%, or +7.20. This uptick can be attributed to a weaker US dollar, which encouraged short-covering in sugar futures. However, throughout this week, sugar prices have largely been under pressure, marking a 2.5-year low for New York sugar and a 2.75-month low for London sugar earlier this week.

The future supply of sugar appears promising in India, as recent predictions of significant rainfall this monsoon season are expected to bolster sugar production. India's Ministry of Earth Sciences has forecasted a monsoon season from June to September with rainfall levels reaching 105% of the long-term average. This anticipated surge in production could contribute to lower sugar prices as global supply improves.

Concerns surrounding a global trade war hang over the sugar market, with apprehensions that potential tariffs could rise, affecting consumer demand and overall economic growth. Prices have also been negatively impacted by shifts in the crude oil market. A significant decline in WTI crude oil prices to four-year lows has created headwinds for sugar prices as lower oil values could reduce ethanol prices. Consequently, sugar mills may prioritize sugar production over ethanol, potentially leading to increased sugar supply.

Analyst Datagro, in its forecast, anticipated a rise in sugar production for Brazil's Center-South region for the 2025/26 season, predicting an increase of 6% year-over-year to reach 42.4 million metric tons. Meanwhile, Green Pool Commodity Specialists have projected a global sugar market surplus of 2.7 million metric tons for the 2025/26 crop cycle, contrasting sharply with an anticipated deficit of 3.7 million metric tons for the 2024/25 season.

Moreover, India's government has eased sugar export restrictions, allowing mills to export 1 million metric tons this season. This comes after a period of stringent measures imposed to maintain sufficient domestic sugar supplies, with only 6.1 million metric tons permitted for export during the 2022/23 season, which was significantly lower than the record 11.1 million metric tons allowed in the previous year. Nevertheless, the Indian Sugar Mills Association (ISMA) warns that India’s sugar production for 2024/25 may drop by 17.5% to a five-year low of 26.4 million metric tons.

Looking beyond India, forecasts for Thailand also suggest an increase in sugar production, with an 18% rise anticipated for the 2024/25 season to 10.35 million metric tons, according to the Office of the Cane and Sugar Board. Thailand ranks as the world’s third-largest sugar producer and the second-largest exporter, making its production levels critical to global supply.

Despite rising production forecasts in some regions, there are also signals of dwindling sugar production in various markets, which might provide some support to prices. Reports from Unica indicated a 5.3% decrease in Brazil's Center-South sugar output for the 2024/25 season through March, totaling 40.169 million metric tons. Additionally, the Indian Sugar and Bio-energy Manufacturers Association has reduced its production forecast for 2024/25 to 26.4 million metric tons, responding to lower expected sugarcane yields.

The International Sugar Organization (ISO) has adjusted its global sugar deficit forecast for 2024/25 to 4.88 million metric tons, up from a previous forecast of 2.51 million metric tons, indicating a tightening market as compared to the surplus of 1.31 million metric tons in the 2023/24 season. The ISO has also downgraded its 2024/25 global production estimate to 175.5 million metric tons from an earlier prediction of 179.1 million metric tons.

Brazil’s recent agricultural struggles, due in part to drought and excessive heat, have led to significant losses in sugar crops, particularly in São Paulo, the leading sugar-producing state. Estimates suggest that as much as 5 million metric tons of sugarcane may have been lost due to damaging fires. Brazil's government crop forecasting agency, Conab, has also revised its sugar production expectations downward, citing adverse weather conditions.

As part of its regular assessments, the USDA projected a 1.5% increase in global sugar production for 2024/25, projecting a record total of 186.619 million metric tons. Alongside this, human sugar consumption is expected to rise by 1.2%, reaching a record 179.63 million metric tons while anticipating a decrease of 6.1% in global sugar ending stocks to 45.427 million metric tons.