Sugar Prices Weighed Down by the Prospects of Ample Global Supplies

Core Insights - Sugar prices exhibited mixed performance, with NY world sugar closing down while London ICE white sugar closed up, reflecting market volatility [1][2] Supply and Demand Dynamics - The International Sugar Organization (ISO) forecasts a sugar surplus of 1.625 million MT for the 2025-26 marketing year, a significant shift from a deficit of 2.916 million MT in 2024-25, driven by increased production in India, Thailand, and Pakistan [2] - ISO also predicts a 3.2% year-over-year increase in global sugar production, reaching 181.8 million MT in 2025-26 [2] Market Reactions - Sugar prices recovered from lows due to short covering after India's food ministry indicated a potential increase in ethanol prices, which may lead to reduced sugar supplies as mills shift focus to ethanol production [3] - Last Friday, sugar prices rallied to three-week highs amid tighter supplies from India, with the government allowing mills to export only 1.5 million MT of sugar for the 2025/26 season, down from earlier estimates of 2 million MT [4] Price Trends and Forecasts - The outlook for robust global sugar supplies has negatively impacted prices, with London sugar hitting a 4.75-year low and NY sugar prices reaching a five-year low, primarily due to increased output in Brazil and expectations of a global surplus [5] - Brazil's crop forecasting agency, Conab, raised its sugar production estimate for 2025/26 to 45 million MT, indicating a bearish outlook for prices [6] - Brazil's Center-South sugar output increased by 16.4% year-over-year in late October, with a higher percentage of sugarcane being crushed for sugar compared to the previous year [6]