Sugar Prices Settle Higher as They Consolidate This Week's Losses

Core Insights - Sugar prices experienced a slight increase on Friday after a week of significant losses, with NY sugar closing up by 0.52% and London sugar by 0.24% [1] - Brazil's sugar production is on the rise, contributing to increased supply and downward pressure on prices, with a reported 18% year-on-year increase in sugar output for the second half of August [2][4] - The International Sugar Organization forecasts a global sugar deficit for the 2025/26 season, marking the sixth consecutive year of deficits, although the projected deficit is improving compared to the previous year [6] Price Movements - NY world sugar 11 closed at +0.08 (+0.52%) and December London ICE white sugar 5 closed at +1.10 (+0.24%) [1] - Sugar prices have been in a downtrend over the past six months due to expectations of higher production in Brazil [4] Production Insights - Brazil's Center-South sugar output in the second half of August rose to 3.872 million tons, an 18% increase year-on-year, with a higher percentage of sugarcane being crushed for sugar [2] - Cumulative sugar output in Brazil for the 2025-26 season through August fell by 1.9% year-on-year to 26.758 million tons [2] Market Dynamics - India's potential diversion of 4 million tons of sugar for ethanol production in 2025/26 may lead to increased exports, with sugar mills expected to export up to 4 million tons, exceeding earlier estimates [3] - An excessively short position by funds in NY sugar futures could lead to gains during any short-covering rally, with net-short positions increasing significantly [5] Global Outlook - The International Sugar Organization projects a global sugar production increase of 3.3% year-on-year to 180.6 million tons for the 2025/26 season, while global consumption is expected to rise by 0.3% to 180.8 million tons [6]