March NY world sugar #11 (SBH26) on Friday closed up +0.39 (+2.68%).  March London ICE white sugar #5 (SWH26) closed up +10.20 (+2.44%).

Sugar prices settled sharply higher on Friday amid fund short covering ahead of a three-day weekend in the US, with markets closed on Monday for the Martin Luther King Day holiday.  

On Thursday, NY sugar tumbled to a 1-month low, and London sugar dropped to a 2-month low.  Strength in India’s sugar production is undercutting prices after the National Federation of Cooperative Sugar Factories Ltd., a sugar producers group in India, reported Thursday that the country’s 2025-26 sugar output climbed to 15.9 MMT from Oct 1-Jan 15, up +21% y/y.  

Higher sugar production in Brazil is also bearish for prices after Unica reported Tuesday that Brazil’s cumulative 2025-26 Center-South sugar output through mid-December rose by +0.9% y/y to 40.158 MMT.  Also, the ratio of cane crushed for sugar rose to 50.91% in 2025/36 from 48.19% in 2024/25.

An excessively long position in London ICE white sugar futures could exacerbate any price decline.  Friday’s weekly Commitment of Traders (COT) report showed funds boosted their white sugar positions by 4,544 net long positions to a record 48,203 (data from 2011).

The outlook for a global sugar surplus is weighing on prices.  On Monday, Covrig Analytics raised its 2025/26 global sugar surplus estimate to 4.7 MMT from 4.1 MMT in October.  However, Covrig projects that the 2026/27 global sugar surplus will fall to 1.4 MMT, as weak prices discourage production.

The outlook for smaller future sugar supplies from Brazil is a supportive factor for prices.  Consulting firm Safras & Mercado said on December 23 that Brazil’s sugar production in 2026/27 will fall by -3.91% to 41.8 MMT from 43.5 MMT expected in 2025/26.  The firm expects Brazil’s sugar exports in 2026/27 to fall by -11% y/y to 30 MMT.

Signs of stronger sugar output in India are negative for prices.  The India Sugar Mill Association (ISMA) on November 11 raised its 2025/26 India sugar production estimate to 31 MMT from an earlier forecast of 30 MMT, up +18.8% y/y.  The ISMA also cut its estimate for sugar used for ethanol production in India to 3.4 MMT from a July forecast of 5 MMT, which may allow India to boost its sugar exports.  India is the world’s second-largest sugar producer.

Sugar prices have been under pressure amid prospects of higher sugar exports from India, after India’s food secretary said the government may permit additional sugar exports to reduce a domestic supply glut.  In November, India’s food ministry said it would allow mills to export 1.5 MMT of sugar in the 2025/26 season.  India introduced a quota system for sugar exports in 2022/23 after late rain reduced production and limited domestic supplies.

The outlook for record sugar output in Brazil is bearish for prices.  Conab, Brazil’s crop forecasting agency, on November 4 raised its Brazil 2025/26 sugar production estimate to 45 MMT from a previous forecast of 44.5 MMT.  

On the bearish side for sugar, the International Sugar Organization (ISO) on November 17 forecast a 1.625 million MT sugar surplus in 2025-26, following a 2.916 million MT deficit in 2024-25.  ISO said the surplus is being driven by increased sugar production in India, Thailand, and Pakistan.  ISO is forecasting a +3.2% y/y rise in global sugar production to 181.8 million MT in 2025-26.  Meanwhile, sugar trader Czarnikow on November 5 boosted its global 2025/26 sugar surplus estimate to 8.7 MMT, up +1.2 MMT from a September estimate of 7.5 MMT.

The outlook for higher sugar production in Thailand is bearish for prices.  The Thai Sugar Millers Corp on October 1 projected that Thailand’s 2025/26 sugar crop will increase by +5% y/y to 10.5 MMT.  Thailand is the world’s third-largest sugar producer and the second-largest exporter.

The USDA, in its bi-annual report released on December 16, projected that global 2025/26 sugar production would climb +4.6% y/y to a record 189.318 MMT and that global 2025/26 human sugar consumption would increase +1.4% y/y to a record 177.921 MMT.  The USDA also forecast that 2025/26 global sugar ending stocks would fall by -2.9% y/y to 41.188 MMT.  The USDA’s Foreign Agricultural Service (FAS) predicted that Brazil’s 2025/26 sugar production would rise by 2.3% y/y to a record 44.7 MMT.  FAS also predicted that India’s 2025/26 sugar production would increase by 25% y/y to 35.25 MMT, driven by favorable monsoon rains and increased sugar acreage.  In addition, FAS predicted that Thailand’s 2025/26 sugar production will increase by +2% y/y to 10.25 MMT.

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