Sugar prices rebound as Brazilian real gains strength

Sugar Market Update: Mixed Performance Amid Global Developments

March contracts for NY world sugar #11 (SBH26) edged up by 0.04 points (0.27%), while March London ICE white sugar #5 (SWH26) slipped by 0.50 points (0.12%).

After an initial decline, sugar prices rebounded and are now showing mixed trends. The rally in the Brazilian real to its highest level in one and a half months against the US dollar prompted short covering in sugar futures. A stronger real typically makes Brazilian sugar exports less attractive, reducing supply pressure from the world's top producer.

Related Market News

Production and Supply Insights

Earlier in the day, sugar prices dipped in response to increased output from Brazil. According to Unica, Brazil’s Center-South region produced 40.222 million metric tons (MMT) of sugar from the start of the 2025-26 season through December, a 0.9% year-over-year increase. Additionally, the proportion of cane processed for sugar rose to 50.82% for 2025/26, up from 48.16% in the previous season.

Expectations of a global sugar surplus continue to weigh on the market. Covrig Analytics recently raised its forecast for the 2025/26 global sugar surplus to 4.7 MMT, up from 4.1 MMT projected in October. However, the surplus is anticipated to narrow to 1.4 MMT in 2026/27 as lower prices may discourage production.

India’s sugar output is also on the rise, putting further pressure on prices. The India Sugar Mill Association (ISMA) reported a 22% year-over-year increase in sugar production from October 1 to January 15, reaching 15.9 MMT for the 2025-26 season. In November, ISMA revised its full-season production estimate upward to 31 MMT, an 18.8% increase from the previous year. The association also reduced its forecast for sugar allocated to ethanol production, potentially freeing up more sugar for export. India remains the world’s second-largest sugar producer.

Market sentiment has been affected by the possibility of increased sugar exports from India. The country’s food secretary indicated that the government may authorize additional exports to address domestic oversupply. In November, India’s food ministry announced that mills would be allowed to export 1.5 MMT of sugar during the 2025/26 season. Since 2022/23, India has managed exports through a quota system following production setbacks caused by late-season rains.

Brazil’s sugar output is projected to reach new highs, which is bearish for prices. On November 4, Brazil’s crop agency Conab raised its 2025/26 sugar production estimate to 45 MMT, up from a previous forecast of 44.5 MMT.

Additional Market Factors

Large speculative positions in London ICE white sugar futures could intensify any downward price movement. The latest Commitment of Traders (COT) report showed that funds increased their net long positions in white sugar by 4,544 contracts, reaching a record 48,203 since 2011.

Looking ahead, a potential reduction in Brazil’s sugar output could support prices. Safras & Mercado, a consulting firm, projected on December 23 that Brazil’s sugar production for 2026/27 will decrease by 3.91% to 41.8 MMT, with exports expected to drop by 11% year-over-year to 30 MMT.

On the bearish side, the International Sugar Organization (ISO) forecasted a surplus of 1.625 million MT for the 2025-26 season, following a deficit of 2.916 million MT in 2024-25. This surplus is attributed to higher production in India, Thailand, and Pakistan. ISO expects global sugar output to rise by 3.2% year-over-year to 181.8 million MT in 2025-26. Meanwhile, Czarnikow, a sugar trading firm, increased its estimate for the 2025/26 global surplus to 8.7 MMT, up from 7.5 MMT in September.

Thailand’s sugar production is also expected to climb. The Thai Sugar Millers Corp projected a 5% year-over-year increase for the 2025/26 crop, reaching 10.5 MMT. Thailand ranks as the world’s third-largest sugar producer and the second-largest exporter.

The USDA’s semiannual report released on December 16 anticipates global sugar production for 2025/26 to rise by 4.6% year-over-year to a record 189.318 MMT, with global human consumption reaching a new high of 177.921 MMT, up 1.4%. The USDA also expects global sugar ending stocks to fall by 2.9% to 41.188 MMT. The Foreign Agricultural Service (FAS) projects Brazil’s 2025/26 sugar output will increase by 2.3% to a record 44.7 MMT, while India’s production is forecast to jump by 25% to 35.25 MMT, supported by favorable monsoon conditions and expanded sugarcane acreage. Thailand’s output is also expected to rise by 2% to 10.25 MMT.