Onome Amuge
Sugar prices slipped on Friday, surrendering early gains after fresh data showed higher-than-expected output from Brazilian mills, even as the International Sugar Organization (ISO) projected the global market would remain in deficit for a sixth consecutive year.
October New York world sugar futures settled 0.67 per cent lower at 16.32 cents a pound, while October London ICE white sugar ended down 0.10 per cent at $503.60 a tonne.
The retreat followed a report from Brazilian industry group Unica that the country’s Centre-South region (The world’s largest producing belt) boosted sugar output by 16 per cent year on year in the first half of August to 3.62 million tonnes. Mills directed 55 per cent of sugarcane towards sugar production, compared with 49 per cent a year earlier, reflecting a shift away from ethanol production.
While cumulative output for the 2025/26 season remains 4.7 per cent lower than last year at 22.9 million tonnes, the stronger mid-August production weighed on futures markets that had rallied earlier in the week.
London sugar futures had touched a three-and-a-half month high in early trading, buoyed by the ISO’s latest forecasts pointing to a marginal deficit of 231,000 tonnes in 2025/26. That shortfall, though modest, would extend a six-year run of global deficits, highlighting structural tightness in the market. The organisation projects global production will climb 3.3 per cent to 180.6 million tonnes, broadly in line with consumption, which is forecast to rise only 0.3 per cent to 180.8 million tonnes.
“Friday’s production numbers from Brazil have provided a reality check. Yes, the deficit remains, but with Brazilian mills running at full tilt, the supply situation looks a little less precarious than traders had priced in earlier this week,” said one London-based commodities analyst.
Market sentiment has also been shaped by Brazil’s crop forecasts. Conab, the government’s agricultural agency, earlier this week trimmed its 2025/26 national sugar production estimate by 3.1 per cent to 44.5 million tonnes, citing lower cane yields. The downward revision provided some support for prices, particularly given drier-than-usual weather conditions in key cane-growing regions.
Analysts said the prioritisation of sugar over ethanol production was likely to continue into the peak of the harvest. With cane crops relatively dry, mills find sugar production more efficient and profitable than ethanol, which is derived from wetter cane.
“Brazil is playing the swing role in the global sugar market once again. The mills’ focus on sugar rather than ethanol is cushioning supply concerns and has the potential to ease volatility in the months ahead,” said Claudiu Covrig of Covrig Analytics.
Still, the longer-term outlook remains finely balanced. Tight inventories, slow production growth outside Brazil, and uncertain demand trends could keep the market susceptible to price swings. In particular, weather in India and Thailand ,the world’s second- and third-largest exporters, will be closely watched as the El Niño climate pattern threatens rainfall across Asia.
