The Outlook for Smaller Exports From India Boosts Sugar Prices

Core Insights - Sugar prices have increased slightly, with March NY world sugar closing up by 0.27% and March London ICE white sugar up by 0.19, indicating a consolidation phase below recent highs [1][2] Supply Dynamics - India's food ministry is considering raising the price of ethanol for gasoline blending, which may lead sugar mills to prioritize ethanol production over sugar, potentially reducing sugar supplies [2] - India has allowed mills to export 1.5 million metric tons (MMT) of sugar for the 2025/26 season, a reduction from earlier estimates of 2 MMT, due to a quota system introduced after production issues [3] Production Forecasts - The International Sugar Organization (ISO) forecasts a sugar surplus of 1.625 MMT for 2025-26, a shift from a deficit of 2.916 MMT in 2024-25, driven by increased production in India, Thailand, and Pakistan [4] - Global sugar production is expected to rise by 3.2% year-on-year to 181.8 million metric tons in 2025-26 [4] Price Pressures - The outlook for robust global sugar supplies has negatively impacted sugar prices, with recent lows recorded in both London and NY sugar markets due to higher output in Brazil and expectations of a global surplus [5] - Brazil's crop forecasting agency, Conab, has raised its sugar production estimate for 2025/26 to 45 MMT, contributing to bearish price sentiment [6] - Brazil's sugar output in the second half of October increased by 16.4% year-on-year, with a higher percentage of sugarcane being crushed for sugar compared to the previous year [6]