Sugar Continues to see Weakness on Outlook for Abundant Global Supplies

Core Insights - Sugar prices are declining due to expectations of abundant global supplies, with NY sugar reaching a 4.25-year low and London sugar a 4-year low, continuing a 7-month downtrend [2] - Projections indicate a global sugar surplus of +2.8 million metric tons (MMT) for the 2025/26 season, a significant shift from a deficit of -4.7 MMT in the 2024/25 season [2] Group 1: Supply Dynamics - Brazil's sugar output increased by +18% year-on-year to 3.872 million tons in the second half of August, with the percentage of sugarcane crushed for sugar rising to 54.20% from 48.78% the previous year [3] - Cumulative sugar output in Brazil for the 2025-26 season through August fell by -1.9% year-on-year to 26.758 MMT [3] - India's potential diversion of 4 MMT of sugar for ethanol production in 2025/26 may lead to increased exports of up to 4 MMT, surpassing earlier expectations of 2 MMT [4] Group 2: Global Production and Consumption - The International Sugar Organization (ISO) forecasts a global sugar deficit of -231,000 MT for the 2025/26 season, improving from a -4.88 MMT shortfall in 2024/25, with production expected to rise by +3.3% year-on-year to 180.6 MMT [5] - Global sugar consumption is projected to increase by +0.3% year-on-year to 180.8 MMT for the 2025/26 season [5] Group 3: Market Outlook - Expectations of a 7.5 MMT global sugar surplus for the 2025/26 season, the largest in 8 years, are contributing to bearish price sentiments [6] - The USDA projects a record global sugar production of +4.7% year-on-year to 189.318 MMT for the 2025/26 season, with ending stocks expected to rise by 7.5% year-on-year to 41.188 MMT [6] - Abundant monsoon rains in India, reported at 893.8 mm or 7% above normal, may lead to a bumper sugar crop, further impacting prices negatively [7]