Sugar prices took a hit today, with May NY world sugar #11 (SBK26) down by -0.02 (-0.13%), while May London ICE white sugar #5 (SWK26) did not trade due to UK markets being closed for the Easter Monday holiday.
The decline in sugar prices can be attributed to negative news from India, where the National Federation of Cooperative Sugar Factories Ltd. reported a 9% year-on-year increase in sugar output from Oct 1-Mar 31, totaling 27.12 million metric tons (MMT) for the 2025-26 season.
However, losses were limited as the Brazilian real (^USDBRL) strengthened to a 3.5-week high against the dollar, making export sales less attractive for Brazilian sugar producers. Additionally, higher sugar production in Brazil, as reported by Unica on March 27, showed a 0.7% year-on-year increase in Center-South sugar output, reaching 40.25 MMT.
Last week, sugar prices reached multi-month highs driven by strength in crude oil prices, which boosted ethanol prices and potentially led sugar mills to increase ethanol production over sugar output. Moreover, supply disruptions from the closure of the Strait of Hormuz have constrained refined sugar output, providing some support to sugar prices.
Despite these factors, concerns about a global sugar surplus persist. Analysts from various organizations have projected surpluses for the 2025-26 crop year, with estimates ranging from 2.74 MMT to 8.3 MMT. The International Sugar Organization (ISO) forecasted a +1.22 MMT surplus for 2025-26, driven by increased production in India, Thailand, and Pakistan.
India, the world’s second-largest sugar producer, has also been a key player in the market. The Indian Sugar and Bio-energy Manufacturers Association (ISMA) projected sugar production at 29.3 MMT for 2025/26, up 12% year-on-year. The country’s government has approved additional sugar exports, potentially adding to the global surplus.
Looking ahead, the USDA’s bi-annual report released in December projected record sugar production and consumption for 2025/26, with global ending stocks expected to decrease slightly. Brazil, India, and Thailand are anticipated to see production increases in the upcoming season.
In conclusion, the sugar market continues to face challenges from oversupply concerns, but developments in key producing countries and global demand dynamics will play a crucial role in shaping future price trends. This article was originally published on Barchart.com.
