Sugar prices recover the potential risk of Brazilian frost
Sieves of sweets by Pejivia via Pixa Bay
October NY World Sugar #11 (SBV25) is +0.75 (+4.81%) today, while London Ice White Sugar #5 (SWQ25) is +19.40 (+4.23) in August.
Today, October sugar matched Wednesday’s contract low, but then it was repeated sharply because it was short and covered. NY Sugar Lossebutures July contract hit its lowest level in 4.25 years on Monday. The August London Sugar was repeated sharply from the recent abundance of 3.75 years on Wednesday.
Sugar prices have risen sharply today as forecasts show possible frost events in Brazil later this month. The peak frost hours in Brazil’s sugar-growing areas are from late July to early August.
Sugar prices have plummeted in the past three months due to expectations of global sugar surplus. On Monday, commodity trader Czarnikow predicted a global sugar surplus of 7.5 mmt for the 2025/26 season. This is the biggest surplus in eight years. On May 22, the USDA predicted in its two reports that global 2025/26 sugar production would increase by +4.7% Y/y to 189.318 million tonnes (MMT).
The outlook for an increase in sugar production in India, the world’s second-largest producer, is bearish for prices. On June 2nd, the National Cooperative Sugar Factory Federation of India predicted that India’s sugar production would rise from +19% y/y to 35 mmt. India’s abundant rainfall outlook could lead to bumper sugar crops. On April 15, India’s Ministry of Earth Science predicted a normal monsoon this year, predicting that the total rainfall forecast would be 105% of the long-term average. The monsoon season in India runs from June to September.
Signs of greater global sugar output are negative for prices. On May 22, USDA’s Foreign Agricultural Services (FAS) predicted that Brazil’s 2025/26 sugar production would rise to +2.3% y/y to a record 44.7 mmt. India’s 2025/26 sugar production is also projected to rise from +25%y/y to 35.3 mmt, citing favorable monsoon rain and increased sugar operating area. Furthermore, Thailand’s 2025/26 sugar production is expected to rise from +2% y/y to 10.3 mmt.
In the bearish factor, the Indian government said on January 20th that it would allow sugar factories to export 1 MMT of sugar this season, allowing them to ease restrictions imposed on sugar exports in 2023. India has allowed only 6.1 mmt of sugar to be exported between the 2022/23 season and September 30, after allowing the export of record 11.1 MMT in the previous season. However, ISMA predicts India’s 2024/25 sugar production will fall to -17.5% y/y to 26.2 mmt, the first in five years. ISMA also reported last Monday that India’s sugar production from October 1 to May was 25.74 MMT, down -17% from the same period last year. Furthermore, India’s Food Secretary Chopra said on May 1 that India’s sugar exports in 2024/25 totaled only 800,000 mt, below previous forecast of 1 MMT.
The outlook for an increase in sugar production in Thailand is bearish for sugar prices. On May 2, the Thai Cane and Sugar Committee office reported that Thailand’s sugar production increased 2024/25 sugar production in Thailand was 14% y/y to 10.00 mmt. Thailand is the third largest sugar producer in the world and the second largest exporter of sugar.
Sugar prices have some support from a decline in sugar production in Brazil. Unica reported on Monday that cumulative 2025/26 Brazil Center South Sugar production had fallen by 9.404 mmt from -14.6% Y/y by mid-June. Last month, CONAB, Brazil’s government crop forecasting agency, said Brazil’s sugar production fell to -3.4% Y/Y to 44.118 MMT last month, with low sugarcane yields due to drought and excessive heat.
The International Sugar Organization (ISO) raised its global sugar shortage forecast for 2024/25 to a nine-year high of -5.47 MMT on May 15th, up from the February forecast of -4.88 MMT. This shows the tightening market after the global sugar surplus for 2023/24 followed by 1.31 mmt. The ISO also reduced its 2024/25 global sugar production forecast to 174.8 mmt from the February forecast of 175.5 mmt.
In its biennial report released on May 22, the USDA predicted that global 2025/26 sugar production would rise to +4.7% Y/y to record 189.318 MMT, and that global human sugar consumption would increase to +1.4% y/y to record 177.921 mmt. The USDA also predicted that the 2025/26 Global Sugar Ending Stock would rise from +7.5%y/y to 41.188 mmt.
On the date of publication, Rich Asplund had no position (directly or indirectly) 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 barchart.com
