Sugar Prices Climb as StoneX Cuts Its Brazil Sugar Production Estimate

Core Viewpoint - Sugar prices have reached 5-week highs due to reduced production estimates in Brazil and potential changes in India's ethanol pricing policy, which may lead to lower sugar supplies [1][2]. Group 1: Price Movements - March NY world sugar 11 (SBH26) increased by +0.21 (+1.41%) and March London ICE white sugar 5 (SWH26) rose by +5.60 (+1.31%) [1]. - Sugar prices have been under pressure since early October due to expectations of robust global sugar supplies, with London sugar hitting a 4.75-year nearest-futures low and NY sugar prices reaching a 5-year nearest-futures low [5]. Group 2: Production Estimates - StoneX revised its Brazil 2026/27 Center-South sugar production estimate down to 41.5 million metric tons (MMT) from 42.1 MMT [1]. - Conab raised its Brazil 2025/26 sugar production estimate to 45 MMT from 44.5 MMT, indicating a bullish outlook for Brazilian sugar output [6]. - Cumulative Center-South sugar output in Brazil through October increased by +1.6% year-on-year to 38.085 MMT [6]. Group 3: Export Policies and Supply Dynamics - India's food ministry is considering increasing the price of ethanol for gasoline blending, which could lead to more sugarcane being diverted to ethanol production, thereby reducing sugar supplies [2]. - India has allowed mills to export 1.5 MMT of sugar for the 2025/26 season, down from earlier estimates of 2 MMT, due to a quota system introduced after reduced production [3]. Group 4: Global Supply Outlook - The International Sugar Organization (ISO) forecasts a sugar surplus of 1.625 million MT for 2025-26, driven by increased production in India, Thailand, and Pakistan, contrasting with a previous deficit forecast [4]. - Czarnikow has increased its global sugar surplus estimate for 2025/26 to 8.7 MMT, up by +1.2 MMT from earlier estimates [5].