Sugar prices took a hit today, with May NY world sugar #11 (SBK26) down by -0.14 (-0.89%) and May London ICE white sugar #5 (SWK26) down by -5.30 (-1.16%). The decline came after an early advance was reversed following a rally in the dollar index ($DXY) to a 10.5-month high, leading to long liquidation in sugar futures.
The pressure on sugar prices also stems from negative carryover from last Friday, fueled by higher sugar production in Brazil. Sugar mills in Brazil are focusing more on sugar output rather than ethanol, with Unica reporting a +0.7% y/y increase in Center-South sugar output to 40.25 MMT. This shift is evident as sugar mills crushed 50.61% of cane for sugar, up from 48.08% last year.
Despite the initial uptick in sugar prices today, driven by strength in crude oil prices, concerns about a global sugar surplus persist. Analysts from various sources have projected surpluses ranging from 2.74 MMT to 3.4 MMT for the 2025/26 crop year. The International Sugar Organization (ISO) also forecasted a +1.22 MMT sugar surplus in 2025-26, driven by increased production in India, Thailand, and Pakistan.
India, the world’s second-largest sugar producer, has seen a significant rise in sugar output, with the Indian Sugar and Bio-energy Manufacturers Association (ISMA) reporting a +10.5% y/y increase in sugar production. This surge has prompted prospects of higher Indian sugar exports, with the government approving additional quotas for export.
Looking ahead, the USDA’s projections indicate a record global sugar production for 2025/26, with increases in production expected for Brazil, India, and Thailand. Despite these projections, concerns about a global sugar surplus and the impact of supply disruptions from the closure of the Strait of Hormuz continue to weigh on sugar prices.
In conclusion, while sugar prices initially saw some gains today, the overall outlook remains bearish due to supply concerns and the potential for a global sugar surplus. Traders and investors will be closely monitoring developments in key sugar-producing countries and global trade dynamics to gauge the future direction of sugar prices.
