Sugar Prices Slip as Stronger Dollar and Rising Supply Weigh

Sugar prices edged lower as a stronger US Dollar pressured the broader commodities market. However, downside momentum remained limited due to expectations of index-related buying tied to the annual rebalancing of major commodity benchmarks.

Citigroup estimates that the Bloomberg Commodity Index (BCOM) and the S&P GSCI could see combined inflows of around $1.2 billion into sugar futures in the coming week, offering short-term support for sugar prices.

Brazil and India Drive Supply Expectations

Earlier gains in sugar prices were supported by concerns over smaller future supplies from Brazil. Consulting firm Safras & Mercado recently projected that Brazil’s sugar output for the 2026/27 season may decline by nearly 4% to 41.8 million metric tons, while exports are expected to drop by 11% year-on-year.

In contrast, rising production in India has weighed heavily on the market. The Indian Sugar Mills Association (ISMA) reported that sugar production from October to December surged 25% compared with last year. ISMA also raised its full-season 2025/26 production forecast to 31 million metric tons.

Sugar prices climbed recently as Brazil’s 2026/27 output forecast was lowered, tightening future supply expectations.

Sugar prices climb as Brazil's 2026/27 production forecast drops by 3.91% to 41.8 MMT. Exports also expected to decrease by 11%. Explore insights: #SugarIndustry #Commodities #Brazilhttps://t.co/19T7meF8b0

— IndexBox (@indexbox) December 24, 2025

Additionally, India reduced estimates for sugar used in ethanol production, potentially allowing more exports. Government officials have signaled that export quotas could be expanded to reduce domestic oversupply, adding further pressure to sugar prices.

Global Production Outlook Remains Bearish

The broader global supply picture continues to favor the bears. Brazil’s crop agency Conab raised its 2025/26 sugar production estimate to 45 million metric tons. Meanwhile, Unica reported that a higher share of sugarcane is being diverted toward sugar production, supporting increased output.

The International Sugar Organization (ISO) forecasts a global sugar surplus for the 2025/26 season, driven by higher production in India, Thailand, and Pakistan. Thailand, the world’s third-largest producer, expects output to rise by 5% year-on-year.

The USDA also projects record global sugar production in 2025/26, with output expected to grow faster than consumption despite steady demand.

Sugar Market Outlook

While index rebalancing flows may provide temporary support, the overall outlook for sugar prices remains cautious. Strong supply growth from major producers and a firm US Dollar are likely to keep upside limited in the near term.

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