Onome Amuge
Sugar prices eased on Tuesday amid speculation that India, the world’s second-largest producer, could export more of the sweetener than previously expected, adding pressure to global markets already grappling with supply dynamics in Brazil.
New York October raw sugar futures settled down 0.6 per cent at 16.03 cents a pound, while December London white sugar slipped 0.02 per cent to $532.40 a tonne.
Traders were focused on comments from sugar merchant Sucden, which said India may divert about 4 million tonnes of sugar to ethanol production in the 2025/26 season. While sizeable, that shift would not be sufficient to absorb the country’s surplus, potentially leaving mills with as much as 4 million tonnes available for export, double earlier expectations of around 2 million tonnes.
“India’s ethanol programme remains supportive for long-term supply, but near-term balances suggest more sugar could flow onto the international market,” one analyst said.
The weakness was tempered by gains in the Brazilian real, which hit a 15-month high against the dollar on Tuesday. A stronger currency discourages export sales by Brazilian producers, limiting the downside for prices.
Analysts noted that speculative positioning could also amplify volatility. Funds increased their net short position in New York sugar futures to 182,608 contracts in the week to September 9, the highest in almost six years, according to the Commodity Futures Trading Commission. That leaves the market vulnerable to sharp rallies if traders cover bets against the commodity.
Sugar prices had tumbled last week to their lowest levels in more than four years as output in Brazil’s Centre-South region surged. Data from industry body Unica showed production in the first half of August rose 16 per cent year on year to 3.6 million tonnes, with mills directing 55 per cent of cane to sugar rather than ethanol, up from 49 per cent a year earlier. Cumulative production for the 2025/26 season through mid-August was still down 4.7 per cent at 22.9mn tonnes.
Global supply balances remain finely poised. The International Sugar Organization forecasts a sixth consecutive deficit in 2025/26, but at 231,000 tonnes the shortfall is far smaller than the 4.9 million tonnes recorded this year. Output is projected to rise 3.3 per cent to 180.6 million tonnes, broadly matching expected consumption of 180.8mn tonnes.
