Signs of a Larger Global Surplus Weigh on Sugar Prices

Core Viewpoint - Sugar prices are experiencing downward pressure due to a projected global sugar surplus, although future supply constraints from Brazil may provide some support for prices [1][3]. Group 1: Global Sugar Supply and Demand - Covrig Analytics has increased its 2025/26 global sugar surplus estimate to 4.7 million metric tons (MMT) from 4.1 MMT, indicating a larger surplus than previously expected [1]. - The forecast for the 2026/27 global sugar surplus is expected to decrease to 1.4 MMT, as lower prices may discourage production [1]. - Brazil's sugar production is projected to decline by 3.91% to 41.8 MMT in 2026/27, down from 43.5 MMT in 2025/26, which could support sugar prices [3]. Group 2: Regional Production Trends - Indian sugar production for the 2025-26 season has surged by 25% year-on-year to 11.90 MMT, prompting concerns about price pressures [4]. - The Indian Sugar Mill Association (ISMA) has raised its 2025/26 production estimate for India to 31 MMT, an increase of 18.8% year-on-year [4]. - India 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]. Group 3: Market Dynamics - Expectations of index-related buying of sugar futures are anticipated to provide support, with Citigroup projecting inflows of $1.2 billion into sugar futures contracts for index rebalancing this week [2]. - The potential for increased sugar exports from India is seen as a negative factor for prices, as the government may permit additional exports to manage domestic supply [5].