Sugar Market Faces Mixed Signals Amid Production Forecasts and Geopolitical Tensions

Sugar prices were mixed on Thursday as market participants weighed various global developments. While pressure mounted from expectations of higher production in Brazil, weakness in the U.S. dollar helped London sugar rebound into positive territory, driven by short-covering.

Brazil Output Forecast Weighs on Sentiment

The bearish sentiment stemmed from Wednesday’s USDA Foreign Agricultural Service (FAS) forecast, which projected Brazil’s 2025/26 sugar output to increase by 2.3% year-over-year, reaching 44.7 million metric tons (MMT). Adding to this, Datagro forecasted a 6% year-over-year rise in Center-South Brazil sugar production to 42.4 MMT, and Green Pool expects the global market to swing from a 3.7 MMT deficit in 2024/25 to a 2.7 MMT surplus in the following season.

Thailand also added pressure, with its Cane and Sugar Board reporting a 14% rise in 2024/25 sugar output to 10.00 MMT, further contributing to bearish momentum.

India’s Lower Output and Weather Disruptions Provide Some Support

Offsetting some of the bearish pressure, India’s  production from October 1 to April 15 dropped 18% year-on-year to 25.5 MMT, according to the Indian Sugar and Bio-Energy Manufacturers Association (ISMA). ISMA also cut its 2024/25 production forecast to a five-year low of 26.4 MMT, citing reduced cane yields.

Brazil’s crop has also been impacted by last year’s drought and heat-induced fires, particularly in São Paulo, potentially reducing sugarcane yield by up to 5 MMT. Conab, Brazil’s crop agency, expects a 3.4% year-over-year drop in 2024/25 output to 44.118 MMT due to these adverse weather conditions.

Supply-Demand Dynamics Remain Delicate

The International Sugar Organization (ISO) recently raised its 2024/25 global  deficit projection to 4.88 MMT from 2.51 MMT, while trimming its production forecast to 175.5 MMT. Meanwhile, the USDA projects record-high global sugar production and consumption for 2024/25 but anticipates a 6.1% drop in global ending stocks, signaling potential market tightening ahead.

On the demand side, concerns linger over the global trade environment, with fears that tariffs could stifle economic growth and raise consumer sugar prices, thereby hurting demand.

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