Sugar Prices Continue Higher on Short Covering

Core Insights - Sugar prices have reached a new one-week high due to short-covering from last week's lows, with NY world sugar 11 up by 1.73% and December London ICE white sugar 5 up by 1.95% [1] Group 1: Sugar Production and Supply - Brazil's sugar output is projected to increase, with Datagro estimating a 3.9% year-on-year rise to a record 44 million metric tons (MMT) for the 2026/27 season [2] - In the first half of October, Brazil's Center-South sugar output rose by 1.3% year-on-year to 2.484 million tons (MT), with the percentage of sugarcane crushed for sugar increasing to 48.24% from 47.33% the previous year [3] - Cumulative sugar output in Brazil's Center-South for the 2025-26 season through mid-October increased by 0.9% year-on-year to 36.016 MMT [3] Group 2: Global Sugar Surplus - BMI Group projected a global sugar surplus of 10.5 MMT for the 2025/26 season, while Covrig Analytics estimated a surplus of 4.1 MMT for the same period [2] - India's sugar production is expected to rebound significantly, with a projected 19% year-on-year increase to 34.9 MMT for the 2025/26 season, following a decline to a five-year low of 26.2 MMT in 2024/25 [4] - India's recent monsoon rains have been above normal, contributing to expectations of a bumper sugar crop [4] Group 3: Export Dynamics - India's sugar mills may export up to 4 MMT of sugar in 2025/26, exceeding earlier expectations of 2 MMT, as the country faces a sugar surplus [5] - The assertion from sugar trader Sucden indicates that India may divert only 4 MMT of sugar for ethanol production, which is insufficient to alleviate the surplus [5]