Sugar Prices Tumble as Brazil Ramps Up Sugar Output

Core Insights - Sugar prices have dropped to one-week lows due to increased sugar production in Brazil [2] - Brazil's sugar output in the second half of August rose by 18% year-on-year to 3,872 million tons, with the percentage of sugarcane crushed for sugar increasing to 54.20% from 48.78% [2] - The cumulative sugar output for the 2025-26 season through August fell by 1.9% year-on-year to 26.758 million tons [2] Group 1: Market Dynamics - Sugar prices in New York and London have decreased, with October NY sugar down 2.20% and December London ICE white sugar down 1.29% [1] - An excessive short position by funds in NY sugar could lead to potential gains in a short-covering rally, as funds increased their net-short positions by 32,849 to 182,608, the highest in nearly six years [4] - The outlook for higher sugar production in Brazil has contributed to a significant drop in NY sugar prices, reaching a 4.25-year low [5] Group 2: Global Supply and Demand - India may divert 4 million tons of sugar to ethanol production in the 2025/26 season, which could lead to increased sugar exports from India, potentially reaching 4 million tons [3][6] - The International Sugar Organization forecasts a global sugar deficit of 231,000 tons for the 2025/26 season, marking the sixth consecutive year of deficits, with global sugar production expected to rise by 3.3% year-on-year to 180.6 million tons [7]