Sugar Prices Fall on Signs of a Larger Global Surplus

Core Insights - Global sugar prices are experiencing downward pressure due to an anticipated larger sugar surplus, with Covrig Analytics increasing its 2025/26 surplus estimate to 4.7 million metric tons (MMT) from 4.1 MMT [1] - However, future projections indicate a decrease in surplus to 1.4 MMT for 2026/27 as low prices may deter production [1] Group 1: Market Dynamics - Expectations of index-related buying are providing support for sugar prices, with Citigroup forecasting $1.2 billion inflows into sugar futures contracts for index rebalancing this week [2] - Brazil's sugar production is projected to decline by 3.91% to 41.8 MMT in 2026/27, which is bullish for prices, alongside an expected 11% year-on-year drop in exports to 30 MMT [3] Group 2: Regional Production Trends - Indian sugar production has surged by 25% year-on-year to 11.90 MMT for the period from October 1 to December 31, 2025, prompting the Indian Sugar Mill Association to raise its overall production estimate for 2025/26 to 31 MMT, an increase of 18.8% year-on-year [4] - The Indian government is considering allowing additional sugar exports to alleviate domestic supply issues, with a quota of 1.5 MMT set for the 2025/26 season [5]