10 November 2025
World sugar market development
After a weak start of the year, the raw sugar market spent the summer in the 15.00-17.00 range. After a third attempt to break above 17.00 in early October, the bottom went out and it was a one-way street south until it reached as low as 14.07 before recovering slightly to 14.50 at the time of writing. Beyond the turbulent macroeconomic environment with rapid shifts in sentiments about US tariff negotiations and global risk appetite, several sugar fundamental developments did not provide any support on the way down. Favorable crop progress in CS Brazil, positive weather developments in the northern hemisphere origins, and a reduced cane allocation in the Indian ethanol production have added pressure on sugar prices. Although current prices seem unjustified by the fundamentals, only limited bullish fundamental developments are expected in the short term. Furthermore, with the next futures contract expiration not due before March 2026, this leaves a long period when derivatives and physical market could possibly remain divergent.
After the downturn in sugar prices, Brazilian sugar prices are below ethanol parity, and millers have adjusted their cane mix accordingly, but time is limited before the end of the campaign to have a real impact. During the first half of October, millers allocated 48.5% of their crushed cane to sugar production, below the previous period’s 51.2%, but still above last year’s 47.3% at this time of the year. The sugar content started the season on the low side but has improved throughout the season. This brings the cumulative sugar production until the first half of October to 36.1 million tons, compared to 35.7 million tons previous year. Most analysts are adjusting their output expectations marginally higher, with a market consensus still between 40 and 41 million tons. Looking ahead, weather forecasts show near-normal conditions until December, while mid-range models suggest wetter than normal conditions to prevail from January onwards. If realized, that would be beneficial for the development of the next campaign cane in the fields.
In India, the lower-than-expected ethanol production allocation to cane by the government means a greater availability of cane dedicated to sugar production, which ultimately translates into a larger sugar availability for exports. However, it is unlikely for the government to take a decision on exports before a clear view on the actual production level, not before sometime in February next year. In the meantime, the crushing season has now begun, with about 10 mills active in the country and most others expected to start early November. Indian cane growing regions benefited from a good monsoon season, bringing 13% above-average rainfall over the cane growing areas. And despite some rainfall excess in some areas, the crop condition is reported as overall favorable with good water reservoir level. The 2025/26 season is now expected to exceed 31 mln T, net of a 3.6 mln T diversion to ethanol. Looking further ahead, initial planting intentions suggest a further increase in cane acreage for the next year 2026/27 crop cycle.
In Thailand, current crop estimates include an increased acreage of about 6% from last year, because of unattractive cassava prices. However, the damage from the white leaf disease is still unclear, especially in the northern regions. The prevalence of a single cane variety across the country represents a particular threat to how quickly and how severe the disease could cause damage to the crop, both this year and in the future.
The global market has left a sugar marketing year (Oct/Sep) with a negative production/consumption balance behind and entered a new one which will bring a surplus. Most analysts still show a very low stock-to-use ratio, which means the market will remain vulnerable to adverse weather, even when considering the oversupply in the coming 12 months.