Sugar Prices Sharply Lower on the Outlook for Higher Brazil Sugar Production

Core Insights - Sugar prices have declined sharply, with March NY world sugar closing down 2.94% and December London ICE white sugar down 2.34%, following an increase in Brazil's sugar production estimates for 2025/26 to 45 million metric tons (MMT) from 44.5 MMT [1] Group 1: Brazil's Sugar Production - Brazil's Center-South sugar output in the first half of October increased by 1.3% year-on-year to 2.484 million tons (MT) [3] - The percentage of sugarcane crushed for sugar by Brazil's sugar mills rose to 48.24% from 47.33% year-on-year [3] - Cumulative sugar output in Brazil's Center-South for 2025-26 through mid-October increased by 0.9% year-on-year to 36.016 MMT [3] Group 2: Global Sugar Supply and Demand - Datagro projected Brazil's Center-South sugar production for 2026/27 to rise by 3.9% year-on-year to a record 44 MMT [2] - BMI Group estimated a global sugar surplus of 10.5 MMT for 2025/26, while Covrig Analytics projected a surplus of 4.1 MMT for the same period [2] Group 3: India's Sugar Production Outlook - India's sugar production for 2025/26 is projected to increase by 19% year-on-year to 34.9 MMT, following a significant decline of 17.5% year-on-year to 26.2 MMT in 2024/25 [4] - Cumulative monsoon rainfall in India was reported at 937.2 mm, 8% above normal, indicating favorable conditions for sugar crop production [4] Group 4: Export Dynamics - India's sugar mills may export up to 4 MMT of sugar in 2025/26, exceeding earlier expectations of 2 MMT, due to a lower diversion of sugar for ethanol production [5] - The assertion from sugar trader Sucden indicates that only 4 MMT of sugar may be diverted for ethanol, which may not alleviate the sugar surplus in India [5]