Global Sugar Surplus Predictions Weigh on Prices

Sugar prices fell to weekly lows amid expectations of a global sugar surplus. Experts anticipate a significant recovery in production, particularly from India and Brazil, impacting market prices negatively for investors in this commodity sector.

Date: 17-05-2025

AI Rating: 4

**Market Conditions Impacting Sugar Prices**
Recent reports indicate that the sugar market is facing downward pressure due to expectations of an impending global surplus. The projections from Datagro highlight a substantial increase in sugar production, predicting a surplus of +1.53 million metric tons (MMT) in 2025/26, reversing a previous deficit. The outlook for increased production is primarily driven by favorable weather conditions in major sugar-producing countries like India and Brazil.

The expansion of sugar production is creating a bearish sentiment in the market, as evidenced by recent trading activity where July and August sugar futures drifted lower. Market dynamics are further complicated by India's provision allowing sugar mills to export 1 MMT, as this alleviates earlier restrictions aimed at managing domestic supply. While this measure could balance domestic markets, it also signals an increase in global supply that could exacerbate price declines.

**Production Forecast Variability**
While many projections suggest an increase in sugar output, a counteracting egret emerges from the Brazilian Center-South production report, showing production drops due to adverse weather conditions last year. Reports of a -38.6% decrease in production for April further complicate projections, hinting at variances in yields that investors should monitor closely.

**Conclusion**
For investors, the current dynamics in the sugar market suggest a period of heightened volatility driven by diverse production forecasts. The consensus leans towards a bearish outlook, with anticipated surplus overshadowing the risk of localized production drops. Investors should brace for potential impacts on stock prices related to sugar-producing companies as these outlooks crystallize into market actions.

Stocks: CAG MDLZ GIS