Global sugar prices will likely be under pressure in the 2025-26 season beginning in October as production in India and Thailand is expected to increase, while in Brazil, it is projected to be robust.
“Global sugar prices continue to decline, spurred by optimistic projections for an enhanced global supply outlook,” said research agency BMI, a unit of Fitch Solutions.
Currently, raw sugar futures on the InterContinental Exchange, New York, are ruling at a four-year low of 16.44 US cents a pound (₹31,325 a tonne). White sugar in London was quoted at $461.90 a tonne on Friday. While raw sugar futures dropped 2 per cent in May, white sugar slipped 3.8 per cent. Prices have declined by about 15 per cent lower since the start of 2025.
Shift in sentiment
“Despite the Commodity Futures Trading Commission’s latest Commitment of Traders release on May 27 indicating a net long position of 5,629 contracts for raw sugar, bearish sentiment has expanded through April and May,” said BMI.
Latest data show that short holdings in sugar among money managers surged to 128,361 contracts, up 108.7 per cent since April 8. During the same period, market bulls reduced their positions from 156,304 contracts to 133,390, a 14.3 per cent cut, which facilitated a decrease in the net long position from 94,796 contracts to 5,269 contracts.
“This sharp shift in sentiment is driven by key supply-side dynamics. Initial estimates for the 2025-26 season indicate a significant increase in Indian sugar output. Additionally, Brazil is expected to accelerate its sugarcane harvest due to a recent period of reduced rainfall,” the research agency said.
Rise in Indian output
UK-based trading firm Czarnikow, however, cut its global sugar production estimate to 7.8 million tonnes (mt) from 9.3 mt recently based on developments in Brazil and Thailand.
It lowered its Brazil sugar production estimate to 39.2 mt from 40 mt earlier and the output projection in Thailand to 10.8 mt from 11.6 mt earlier.
BMI said initial projections for India’s 2025-26 sugar season suggest a notable 26.3 per cent year-on-year increase in production, thanks to favourable weather conditions.
Recently, the National Federation of Cooperative Sugar Factories said India’s sugar production will increase by 19 per cent from the current season to 35 mt in the 2025-26 season as the sugarcane coverage has increased.
BMI said optimism over Indian sugar production recovery adds to bearish sentiment in the global market, reinforcing the hopes of ample global supplies.
Crude oil retreat
“However, India’s existing export restrictions, designed to support domestic ethanol blending and stabilise prices, are expected to limit its impact on global supplies…,” it said. The one million tonnes cap on exports will likely not be fully lifted.
Earlier this year, ING Think, the financial and economic analysis wing of Dutch financial services firm ING, said global surplus in the 2024-25 and 2025-26 seasons hinged on Indian production.
BMI said the retreat in crude oil prices will aid more sugar production in Brazil than ethanol output. Brent crude is currently ruling at $66.26 a barrel, down 12 per cent since the beginning of the year. Crude oil has gained this week on optimism over peak seasonal demand.
“However, the stronger-than-expected preference for sugar production has intensified the downward pressure on prices,” said BMI.
Production challenges
Though Brazil sugar industry association UNICA’s data showed that sugar production declined between April 1 and May 16 by 22.7 per cent in the South-Central region and 28.7 per cent in São Paulo due to slow harvesting of sugarcane, optimism continues for production rising later.
While sugar production is still expected to be favoured in Brazil, further shifts will be moderated by the recent decline in global sugar prices since the last UNICA report, said the research agency.
BMI said favourable sugarcane harvests in key regions further support the outlook for robust global supplies. “If these production expectations are met and market confidence strengthens, sugar prices may continue to face downward pressure,” it said.
On the other, the possibility of production challenges could still lead to significant price increases, as the market remains heavily reliant on the 2025-26 crop amidst tight carryover stocks among major exporters, it said. The US Department of Agriculture has estimated global beginning stocks for the 2025-26 season at 38.3 mt, a decline of 15.1 per cent decline year-on-year. It is the lowest level since the 2012-13 season, said BMI.
Published on June 6, 2025