Core Insights - Sugar prices are experiencing mixed trends, with NY sugar reaching a 1.5-week high while London sugar is slightly down [2] - The global sugar market is projected to have a surplus in the upcoming 2025/26 season, reversing the previous year's deficit [3][6] Price Movements - October NY world sugar 11 is up by +0.11 (+0.70%), while December London ICE white sugar 5 is down by -1.20 (-0.26%) [1] - The rise in crude oil prices has led to short covering in sugar futures, benefiting sugar prices indirectly [2] Supply Dynamics - Brazil's sugar output has increased, with a reported rise of +18% year-on-year in the second half of August, contributing to bearish price sentiment [4] - The percentage of sugarcane crushed for sugar in Brazil has also increased, indicating a shift towards higher sugar production [4] Global Production and Consumption - StoneX forecasts a global sugar surplus of +2.8 million metric tons (MMT) for the 2025/26 season, contrasting with a deficit of -4.7 MMT in the 2024/25 season [3] - The International Sugar Organization (ISO) projects a global sugar production increase of +3.3% year-on-year to 180.6 MMT for the 2025/26 season [6] Regional Insights - India's potential diversion of 4 MMT of sugar for ethanol production in 2025/26 may not alleviate its sugar surplus, leading to increased exports [5] - The cumulative sugar output in Brazil for the 2025-26 season has decreased by -1.9% year-on-year, despite the recent increase in production [4]

Core Insights - Sugar prices have recently increased due to a rise in WTI crude oil prices, which may lead to a shift in sugar production towards ethanol, potentially reducing sugar supplies [1] Group 1: Sugar Production and Supply - Brazil's sugar production in the first half of August increased by 16% year-on-year to 3,615 million tons, with the percentage of sugarcane crushed for sugar rising to 55% from 49.15% the previous year [2] - Brazil's government crop forecasting agency, Conab, reduced its 2025/26 sugar production estimate by 3.1% to 44.5 million tons, citing lower sugarcane yields due to drought and excessive heat [5] - Covrig Analytics reported that Brazilian sugar mills are currently prioritizing sugar production over ethanol, leading to increased cane crushing for sugar [3] Group 2: Global Sugar Market Outlook - The International Sugar Organization (ISO) forecasts a global sugar deficit of 231,000 tons for the 2025/26 season, marking the sixth consecutive year of deficits, although this is an improvement from a 4.88 million ton shortfall in 2024/25 [4] - The USDA projected a record global sugar production of 189.318 million tons for the 2025/26 season, with ending stocks expected to rise by 7.5% year-on-year to 41.188 million tons [6] - Expectations for abundant sugar supplies are currently undermining sugar prices, with a projected global sugar surplus of 7.5 million tons for the 2025/26 season, the largest in eight years [6]