Global Sugar Production Surge Pressures Prices Amid Low Demand

Sugar prices are under pressure due to forecasts of increased global production, with significant contributions from Brazil and India. This situation could impede short-term price recovery, as reports of adverse weather effects and government policies unfold.

Date: 30-05-2025

AI Rating: 4

Market Overview: The recent analysis indicates a troubling outlook for sugar prices, driven primarily by projections of increased global sugar output for the 2025/26 season. Brazil and India, two major players in sugar production, are expected to contribute to a significant surplus.

Forecasted Production and Demand: According to the USDA, global sugar production is estimated to rise by 4.7% y/y, leading to a record of 189.318 million metric tons. This surge, combined with a projected global surplus of 41.188 million metric tons, is likely to weigh heavily on sugar prices. Such expectations generally indicate weak price support, especially when considering that Brazil's sugar output is anticipated to rise by 2.3% y/y.

Impact from India and Other Regions: India's sugar production is projected to rise by 25% y/y due to favorable weather conditions. In addition, Thailand's production outlook adds to global pressure with a 14% increase, raising concerns about oversupply. These favorable forecasts undercut any sense of recovery for sugar pricing as they signal abundant supply.

Weather Concerns: Adding complexity, the outlook for bumper crops in India due to anticipated above-normal monsoon rains may increase production further, contributing to the global sugar surplus.

Market Sentiment: The sentiment in the market remains bearish as signs of increased output overshadow any potential recovery from recent losses. The falling prices have raised concerns amongst producers and investors, indicating that a cautious position might be prudent in the short term.

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