Sugar prices saw a significant increase on the back of a surge in oil prices following Israel’s bombing of 30 oil depots in Iran. This rise in oil prices has led to a rally in ethanol prices, prompting sugar mills worldwide to shift their focus towards ethanol production rather than sugar. As a result, sugar supplies have been curbed, leading to the increase in sugar prices.
Despite this recent uptick in sugar prices, concerns about a global sugar surplus persist. Analysts from sugar trader Czarnikow and Green Pool Commodity Specialists have projected significant surpluses in the sugar market for the 2025/26 crop year. StoneX also expects a surplus in the global sugar market. However, the International Sugar Organization (ISO) has revised its earlier projection of a sugar surplus for 2025-26, predicting a lower surplus driven by increased sugar production in countries like India, Thailand, and Pakistan.
Brazil, one of the major players in the sugar market, has shown signs of lower sugar output, which has supported sugar prices. Despite a decrease in sugar production in Brazil’s Center-South region, the overall sugar output for the region in the 2025-26 season remains slightly higher compared to the previous year. Additionally, India, the world’s second-largest sugar producer, has reported a rise in sugar output, which may allow the country to increase its sugar exports.
On the other hand, the outlook for higher sugar production in Thailand is bearish for sugar prices, as the country is expected to see a significant increase in sugar production for the 2025/26 season. The USDA’s bi-annual report also projects a record global sugar production for 2025/26, with increases in production expected from countries like Brazil, India, and Thailand.
Overall, the sugar market continues to face challenges due to concerns about a global sugar surplus and fluctuating production levels in key sugar-producing countries. While some regions are experiencing lower sugar output, others are ramping up production, leading to a mixed outlook for sugar prices in the coming months. Investors and traders will need to closely monitor market dynamics and production trends to make informed decisions in the sugar market.
