Sugar Prices Continue Higher on Short Covering

March NY world sugar #11 (SBH26) on Monday closed up +0.22 (+1.52%), and December London ICE white sugar #5 (SWZ25) closed up +7.60 (+1.83%).

Sugar costs on Monday posted a brand new 1-week excessive as short-covering continued from final week’s lows.  Sugar additionally noticed some help from Monday’s +0.35% rally within the Brazilian actual versus the greenback, which diminished the motivation for Brazilian producers to promote sugar.

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Final Thursday, NY sugar posted a 5-year nearest-futures low and London sugar posted a 4.75-year low, primarily as a result of larger sugar output in Brazil and discuss of a worldwide sugar surplus.  Datagro on October 21 projected that Brazil’s Heart-South 2026/27 sugar manufacturing will climb +3.9% y/y to a report 44 MMT.  In associated information, BMI Group on October 13 projected a worldwide 2025/26 sugar surplus of 10.5 MMT, and Covrig Analytics on October 7 projected a worldwide 2025/26 sugar surplus of 4.1 MMT.

Larger sugar output in Brazil is undercutting costs after Unica reported final Thursday that Brazil’s Heart-South sugar output within the first half of October rose by +1.3% y/y to 2.484 MT.  Additionally, the share of sugarcane crushed for sugar by Brazil’s sugar mills within the first half of October elevated to 48.24% from 47.33% the identical time final 12 months.  As well as, cumulative 2025-26 Heart-South sugar output by means of mid-October rose +0.9% y/y to 36.016 MMT.

The outlook for larger sugar exports from India is adverse for sugar costs, as plentiful monsoon rains could produce a bumper sugar crop.  On September 30, India’s Meteorological Division reported that cumulative monsoon rainfall as of that date was 937.2 mm, 8% above regular, marking the strongest monsoon in 5 years.  On June 2, India’s Nationwide Federation of Cooperative Sugar Factories projected that India’s 2025/26 sugar manufacturing would climb +19% y/y to 34.9 MMT, citing bigger planted cane acreage.  That may comply with a -17.5% y/y decline in India’s sugar manufacturing in 2024/25 to a 5-year low of 26.2 MMT, in keeping with the Indian Sugar Mills Affiliation (ISMA).  

One other bearish issue for sugar was the latest assertion from sugar dealer Sucden that India could divert solely 4 MMT of sugar to make ethanol in 2025/26, which isn’t sufficient to ease the nation’s sugar surplus and will immediate India’s sugar mills to export as a lot as 4 MMT of sugar, above earlier expectations of two MMT.  India is the world’s second-largest producer of sugar.

The outlook for larger sugar manufacturing in Thailand is bearish for costs.  The Thai Sugar Millers Corp on October 1 projected that Thailand’s 2025/26 sugar crop will improve by +5% y/y to 10.5 MMT.  On Could 2, Thailand’s Workplace of the Cane and Sugar Board reported that Thailand’s 2024/25 sugar manufacturing rose +14% y/y to 10.00 MMT.  Thailand is the world’s third-largest sugar producer and the second-largest exporter.

The Worldwide Sugar Group (ISO) forecasted a worldwide sugar deficit for the 2025/26 season on August 29, marking the sixth consecutive 12 months of deficits.  ISO tasks a worldwide 2025/26 sugar deficit of -231,000 MT, down from the -4.88 MMT shortfall in 2024/25.  ISO additionally tasks that 2025/26 world sugar manufacturing will rise by +3.3% y/y to 180.6 MMT, and 2025/26 world sugar consumption will improve by +0.3% y/y to 180.8 MMT.

The USDA, in its bi-annual report launched Could 22, projected that world 2025/26 sugar manufacturing would climb +4.7% y/y to a report 189.318 MMT and that world 2025/26 human sugar consumption would improve +1.4% y/y to a report 177.921 MMT.  The USDA additionally forecast that 2025/26 world sugar ending shares would climb by +7.5% y/y to 41.188 MMT.  The USDA’s Overseas Agricultural Service (FAS) predicted that Brazil’s 2025/26 sugar manufacturing would rise by 2.3% y/y to a report 44.7 MMT.  FAS additionally predicted that India’s 2025/26 sugar manufacturing would improve by 25% y/y to 35.3 MMT, pushed by favorable monsoon rains and elevated sugar acreage.  As well as, FAS predicted that Thailand’s 2025/26 sugar manufacturing will improve by +2% y/y to 10.3 MMT. 

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