Sugar prices closed higher on Friday after a three-week decline, driven by oversold conditions that led to technical short covering in sugar futures. The pressure on sugar prices is due to higher sugar output in Brazil, with projections of a global sugar surplus by various organizations. Brazil’s sugar production is expected to reach record levels in the coming years.

Brazil’s Center-South sugar output in the first half of October rose by 1.3% year-over-year, contributing to the bearish outlook for sugar prices. India’s abundant monsoon rains are expected to result in a bumper sugar crop, further adding to the negative sentiment. India may divert some sugar to ethanol production, but it may not be enough to alleviate the surplus.

Thailand is also projected to see an increase in sugar production, further weighing on prices. The International Sugar Organization forecasts a global sugar deficit for the upcoming season, marking the sixth consecutive year of deficits. Despite the bearish factors, global sugar production is expected to rise, leading to an increase in ending stocks.

The USDA’s bi-annual report projects record sugar production for the 2025/26 season, with an increase in human sugar consumption as well. Brazil, India, and Thailand are expected to contribute significantly to the rise in production. Overall, the outlook for sugar prices remains bearish due to the projected surpluses and increased production levels globally.

Read more at Yahoo Finance: Oversold Conditions Spark Short Covering in Sugar Futures