Sugar prices fall on Global Sugar Surplus Outlook

May country sugar NY #11 (SBK26) on Friday closed -0.06 (-0.43%), and May London ICE white sugar #5 (SWK26) closed -0.20 (-0.05%).

Sugar prices fell on Friday after the International Sugar Organization (ISO) forecast +1.22 MMT (million metric ton) sugar surplus in 2025-26, down from the previous forecast of +1.63 MMT. That follows a -3.46 MMT deficit in 2024-25. ISO said the surplus was driven by increased sugar production in India, Thailand and Pakistan. ISO forecasts a +3.0% y/y increase in global sugar production to 181.3 million MMT by 2025-26.

On February 12, sugar prices fell to a 5.25-year low on concerns that the global sugar surplus will continue. On February 11, analysts at sugar trader Czarnikow said they expected a global sugar surplus of 3.4 MMT in the 2026/27 crop year, following a surplus of 8.3 MMT in 2025/26. Also, Green Pool Commodity Specialists said on January 29 that they expect a global sugar surplus of 2.74 MMT in 2025/26 and a surplus of 156,000 MT for 2026/27. Meanwhile, StoneX said on February 13 that it expects a global sugar build-up of 2.9 MMT in 2025/26.

Signs of lower sugar output in Brazil support sugar prices, after Unica last Wednesday reported that sugar production in the Center-South of Brazil in the second half of January fell by 36% y / y to only 5,000 MT. However, Center-South sugar production for 2025-26 through January increased by +0.9% year-on-year to 40.24 MMT. Also, the ratio of milled sugar cane increased to 50.74% in 2025/26 from 48.14% in 2024/25.

An extremely short position in NY sugar futures could add fuel to a short covering rally. Last Friday’s commitment to traders (COT) report showed that funds increased their short position in NY sugar futures and options by 14,381 in the week ended February 17 to a record high of 265,324 short positions (data from 2006).

Consulting firm Safras & Mercado said on December 23 that Brazil’s sugar production in 2026/27 will decline by -3.91% to 41.8 MMT from 43.5 MMT expected in 2025/26. The company expects Brazilian sugar exports in 2026/27 to decrease by 11% year-on-year to 30 MMT.

On Wednesday, the Indian Sugar and Bio-energy Manufacturers Association (ISMA) projected India’s 2025/26 sugar production at 29.3 MMT, up 12% y/y, below the previous forecast of 30.95 MMT. ISMA reported on January 19 that India’s sugar production for 2025-26 from Oct 1-Jan 15 rose +22% year-on-year to 15.9 MMT. ISMA also cut its estimate of sugar used for ethanol production in India to 3.4 MMT from July’s forecast of 5 MMT, which may allow India to increase its sugar exports. India is the second largest producer of sugar in the world.

Sugar prices are falling amid prospects for higher Indian sugar sales. On February 13, the Indian government approved an additional 500,000 MT of sugar for export in the 2025/26 season, on top of the 1.5 MMT approved in November. India is introducing a quota system for sugar exports in 2022/23 after recent rains reduced production and limited domestic supplies.

The idea of ​​high sugar production in Thailand is low in prices. Thai Sugar Millers Corp on October 1 forecast that Thailand’s 2025/26 sugar harvest will increase by +5% year-on-year to 10.5 MMT. Thailand is the world’s third largest sugar producer and second largest exporter.

The USDA, in its annual report released on December 16, predicted that 2025/26 global sugar production will increase +4.6% year-on-year to a record 189.318 MMT and that global human consumption of sugar for 2025/26 will increase +1.4% year-on-year to a record 177.921 MMT. The USDA also forecast that 2025/26 finishing sugar stocks will decrease by -2.9% year-on-year to 41.188 MMT. USDA’s Foreign Agricultural Service (FAS) has predicted that Brazil’s sugar production for 2025/26 will increase by 2.3% each year to a record 44.7 MMT. FAS also forecast that India’s sugar production for 2025/26 will increase by 25% y/y to 35.25 MMT, driven by good monsoons and increased sugar acreage. In addition, FAS predicted that Thailand’s 2025/26 sugar production will increase by +2% year-on-year to 10.25 MMT.

As of the date of publication, Rich Asplund did not have (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com