Sugar Prices Rebound on Stronger Brazilian Real, Despite Global Surplus Concerns

Global sugar prices recovered from early losses and traded mixed, supported by a stronger Brazilian real and short covering in futures markets. The Brazilian real recently strengthened to a 1.5-month high against the US dollar, reducing the incentive for Brazilian producers to sell sugar into export markets and providing short-term price support.

However, fundamentals remain mixed as global supply prospects continue to weigh on the market.

In Brazil, sugar production remains robust. UNICA reported that cumulative 2025/26 Center-South sugar output through December rose 0.9% year-on-year to 40.22 million tonnes (MMT). The share of cane allocated to sugar production increased to 50.82%, up from 48.16% in the previous season, reinforcing near-term supply pressure.

Concerns over a global sugar surplus persist. Covrig Analytics recently raised its 2025/26 global sugar surplus estimate to 4.7 MMT, up from 4.1 MMT previously. Nevertheless, it expects the surplus to narrow to 1.4 MMT in 2026/27, as lower prices may discourage production.

India remains a key bearish factor. India Sugar Mill Association (ISMA) reported that India’s sugar output from 1 October to 15 January rose 22% y/y to 15.9 MMT. ISMA has also increased its 2025/26 production forecast to 31 MMT, up nearly 19% y/y. Importantly, sugar use for ethanol has been revised down to 3.4 MMT, from a previous estimate of 5 MMT, potentially allowing higher sugar exports. India is the world’s second-largest sugar producer.

Adding to export expectations, India’s government has signalled it may allow additional sugar exports to ease domestic oversupply. Authorities have already approved 1.5 MMT of exports for the 2025/26 season.

From a longer-term perspective, Brazil presents a mixed outlook. While Conab raised its 2025/26 Brazil sugar production forecast to 45 MMT, consultancy Safras & Mercado expects output to fall 3.9% in 2026/27 to 41.8 MMT, with exports declining 11% y/y to 30 MMT, offering potential medium-term support.

Thailand is also contributing to global supply growth. Thai Sugar Millers Corp projects Thailand’s 2025/26 sugar production to rise 5% y/y to 10.5 MMT. Thailand is the world’s third-largest producer and second-largest exporter.

Meanwhile, the USDA forecasts record global sugar production of 189.3 MMT in 2025/26 (+4.6% y/y), while consumption is expected to reach 177.9 MMT (+1.4% y/y). Global ending stocks are projected to decline 2.9% to 41.2 MMT, partially offsetting supply concerns.

Outlook:

While currency movements and future production cuts in Brazil provide some support, the sugar market remains constrained by strong output and export potential from major producers, particularly India, Brazil, and Thailand.