Sugar Prices Finish Sharply Lower as Brazil's Sugar Production Climbs

Core Insights - Sugar prices have declined sharply due to increased production in Brazil, with October NY world sugar closing down 2.26% and December London ICE white sugar down 1.44% [1][2] Production and Supply - Brazil's Center-South 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% the previous year [2] - Cumulative sugar output for the 2025-26 season through August fell by 1.9% year-on-year to 26.758 million tons [2] - Brazil's sugar mills are prioritizing sugar production over ethanol, leading to increased cane crushing for sugar as harvesting peaks [5] Export Dynamics - India may divert 4 million tons of sugar to ethanol production in the 2025/26 season, which could lead to an increase in sugar exports, with expectations of up to 4 million tons, surpassing earlier estimates of 2 million tons [3][6] - The Indian Sugar and Bio-energy Manufacturers Association has requested permission to export 2 million tons of sugar for the 2025/26 season [6] Market Sentiment - An excessive short position by funds in NY sugar futures could lead to potential gains in a short-covering rally, with net-short positions increasing by 32,849 to 182,608, the highest in nearly six years [4] - 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, although this is an improvement from a 4.88 million ton shortfall in 2024/25 [7]