Onome Amuge

Global sugar prices extended their decline on Friday, weighed down by expectations of stronger supply from two of the world’s largest producers, India and Brazil, even as a strengthening Brazilian real helped stem sharper losses.

New York October raw sugar futures slipped 0.19 per cent to 15.68 cents per pound, while London ICE October white sugar contracts fell 0.61 per cent to $491.20 per tonne. The moves capped a volatile week in which the sweetener tumbled to a 4.25-year low on the New York exchange, reflecting growing bearishness about the market’s supply outlook.

The trigger for Friday’s slide came from India’s sugar and bio-energy manufacturers’ association, which confirmed it had sought government approval to export two million tonnes of sugar in the 2025/26 season starting October. The announcement rekindled fears that fresh Indian exports, following strong monsoon rains and an anticipated bumper crop, could weigh further on already pressured global prices.

“India’s return as an exporter has always been the swing factor in sugar. This request reinforces the view that global supply could be more than adequate in the coming year,” said Warren Patterson, head of commodities strategy at ING. 

In parallel, production momentum in Brazil’s Center-South region has continued to accelerate. Data from Unica, the Brazilian sugarcane industry group, showed output in the first half of August rose 16 per cent year-on-year to 3.62 million tonnes, with mills diverting 55 per cent of cane to sugar production versus 49 per cent a year earlier.

While cumulative output for the 2025/26 season remains 4.7 per cent below last year’s level, analysts expect Brazil’s mills to maintain their sugar-first strategy through the peak harvest, encouraged by drought-affected cane that favours sugar yields over ethanol production.

“Brazil’s producers are making a clear statement — with higher ethanol inventories and strong sugar economics, the balance will tilt decisively toward sugar in the months ahead,” said Claudiu Covrig, founder of Covrig Analytics.

The real, which rose to a 15-month high against the US dollar during the week, helped temper downward pressure on prices by reducing the incentive for Brazilian exporters to sell into international markets. A weaker dollar generally makes commodities priced in the currency cheaper for buyers holding other currencies, but in this case the stronger real increases costs for exporters.

The short-term price weakness comes despite longer-term projections that continue to suggest a relatively tight balance. The International Sugar Organization last month forecast a global deficit of 231,000 tonnes for 2025/26, marking a sixth consecutive year of shortages, albeit sharply narrower than the nearly 5 million tonne shortfall in 2024/25.

The US Department of Agriculture in May forecast record global output of 189.3 million tonnes, up nearly 5 per cent year-on-year, with ending stocks rising 7.5 per cent. Commodities trader Czarnikow has gone further, projecting a surplus of 7.5 million tonnes, the largest in eight years.

“These contrasting estimates highlight just how divided the market remains. On one side you have expectations of surpluses from Brazil and India, and on the other, the ISO pointing to deficits that suggest supply is only just keeping pace with demand,” said Michael McDougall, managing director at Paragon Global Markets. 

India’s production trajectory remains the key wildcard. After a sharp 17.5 per cent drop last season to a five-year low of 26.2 million tonnes due to erratic weather, output is expected to rebound strongly. The National Federation of Cooperative Sugar Factories has projected a 19 per cent increase in 2025/26 production to 34.9 million tonnes, citing larger planted acreage and ample rainfall.

India’s Meteorological Department reported cumulative monsoon precipitation at 826.2mm as of September 10, about 8 per cent above the seasonal norm, setting the stage for a bumper cane harvest.

“India’s crop outlook is shaping up to be the most significant bearish driver for the next season. With planted area expanding and weather cooperating, the country could easily swing from deficit to surplus — and that changes the whole global picture,” said Kona Haque, head of research at ED&F Man. 

On the demand side, the International Sugar Organization expects global consumption to grow just 0.3 per cent in 2025/26 to 180.8 million tonnes. That sluggish growth, combined with the prospect of abundant supply, has prompted hedge funds and other speculative traders to increase bearish bets on sugar futures in recent weeks.