On Tuesday, NY world sugar #11 closed up +0.37% while London ICE white sugar #5 closed up +0.23%. Sugar prices recovered from recent losses after hitting 2-month highs last week. Brazil’s sugar mills are focusing on sugar production over ethanol, increasing production as harvesting peaks due to drier cane crops.

Sugar prices surged last Tuesday on concerns over weaker cane yields in Brazil. Despite a -0.8% y/y decline in sugar output in Brazil’s Center-South, the percentage of sugarcane crushed for sugar increased. Conab reported a -3.4% y/y drop in Brazil’s sugar production due to drought and heat, impacting sugarcane yields.

India’s potential increase in sugar exports may hurt sugar prices as abundant monsoon rains are expected to produce a bumper crop. India’s Meteorological Department reported 1% above normal rainfall, leading to plans to export 2 MMT of sugar in 2025/26. This adds to the bearish outlook for sugar prices.

India’s sugar production is projected to rise by 19% y/y in the 2025/26 season, following a significant decline in the previous year. The increase is attributed to larger cane acreage. However, higher production in India, the world’s second-largest producer, contributes to the bearish sentiment for sugar prices.

Sugar prices have been declining due to expectations of a surplus in the 2025/26 season. Czarnikow projected a 7.5 MMT global sugar surplus, the largest in 8 years. The USDA forecasted a +4.7% y/y increase in global sugar production for 2025/26, leading to a record surplus and higher global sugar ending stocks.

Thailand’s sugar production rose by 14% y/y in the 2024/25 season, contributing to the bearish outlook for sugar prices. Thailand is the world’s third-largest sugar producer and second-largest exporter. The increase in production adds to the global surplus and impacts sugar prices negatively.

Read more at Yahoo Finance: Sugar Prices Finish Higher and Consolidate Recent Losses