Sugar prices are slowly climbing back up on the futures markets. However, the mood among market participants hasn't abated yet. This is mainly due to a surplus on the global sugar market, as predicted by the ISO. There's more bullish news from India, which has less sugar to export than analysts had previously anticipated.
After the dip at the beginning of November, when sugar prices on the New York and London futures markets fell sharply, we are now seeing a moderate recovery. Sugar rose to its highest level in over a month. Analysts don't yet believe the rise on the futures markets is entirely convincing. Sugar production for the coming season is estimated to exceed consumption.
The International Sugar Organization (ISO) projects a sugar surplus of 1,6 million tons for the 2025/26 season. For the 2024/25 season, there was still a deficit of 2,9 million tons. According to the organization, global sugar production will grow by 3,2% to 181,8 million tons. Sugar consumption will grow less rapidly, by 0,6% to 180,2 million tons. The larger harvest is mainly due to better harvests in India, Pakistan, and Thailand. In its previous forecast from August, the ISO assumed a sugar surplus of 231.000 tons for the 2025/26 season. The forecast has therefore been significantly revised.
Sugar exports from India are a bit of a different story. Traders expected India to establish an export quota of 2 million tons. That quota turned out to be slightly lower. The government announced earlier this month that 1,5 million tons of sugar may be exported from India. The export quotas were introduced several years ago because India was facing a tight supply of sugar on the domestic market.
Although sugar exports are now officially permitted, there is still little interest among Indian producers to actually ship sugar abroad. The problem is the low sugar price on the global market. On the Indian market, the price is somewhat higher. Reuters news agency reports, based on various traders, that Indian sugar is selling for $450 per tonne FOB (delivered on the ship). This makes Indian sugar approximately $25 per tonne more expensive than the benchmark, the futures contract on the Liffe in London.
Another factor affecting the Indian sugar industry is ethanol production. The Indian Ministry of Food and Agriculture is reportedly considering raising ethanol prices. This would make it more attractive for sugarcane processors to produce more ethanol instead of sugar. This has direct consequences for the availability of sugar for export and, consequently, for the global sugar balance.
Weak real boosts Brazilian exports
Brazil, another major global sugar exporter, is enjoying a relatively positive outlook. The Brazilian real is under pressure, which is beneficial for Brazilian exports. Sufficient sugar is available, according to harvest forecasts. On November 4, Conab raised its production forecast for 2025/26 to 45 million tons. Unica reported that sugarcane production in Central-South Brazil was 16,4% higher in the second half of October than last year. For the entire season up to and including October, production increased by 1,6% to 38 million tons.