Sugar Prices Drop as Brazilian Output Surges; El Niño Sends Mixed Signals]

Nymex July sugar futures (SBN26) settled down 0.40 cents, or 2.75%, at 14.05 cents per pound on Wednesday, while ICE August white sugar (SWQ26) fell 7.10, or 1.63%, to $434.10 per metric ton.

The sell-off pushed both contracts to multi-week lows, pressured by stronger-than-expected Brazilian sugar production. Unica reported that Center-South Brazil produced 2.475 million metric tons of sugar in April, up 55.3% year-over-year, with sucrose per ton of cane reaching 112.58 kilograms—up 5.4% from the same period last year.

Weaker crude oil prices also weighed on sugar sentiment. Nymex crude for June (CLN26) dropped to a five-week low on Wednesday, depressing ethanol values and encouraging Brazilian mills to prioritize sugar output over biofuel production, thereby boosting near-term supplies.

Thailand’s robust sugar exports further pressured prices. The nation exported 1.6 million metric tons in January-April, a 29% jump from the prior year.

Earlier this week, the International Sugar Organization revised its outlook for the 2025/26 season, projecting a global surplus of 2.2 million metric tons—a sharp turnaround from a 3.46 million metric ton deficit in 2024-25. The ISO now expects world sugar production to reach a record 182 million metric tons in 2025/26, up 3.5% from last year.

However, weather-related concerns provided some price support. The development of El Niño threatens to disrupt output in key producing regions including Brazil, India, and Thailand. NOAA estimates an 82% probability of El Niño conditions emerging by July and persisting through year-end, with a 67% chance of a “Super El Niño.”

The ISO forecasts a 1.15% year-on-year decline in global sugar production for 2026/27 to 180 million metric tons, potentially creating a deficit of 262,000 metric tons amid weather pressures in India and Thailand.

Forward-looking estimates remain divided. Citigroup projects Brazil’s 2026/27 sugar output at 39.50 million metric tons—below Conab’s forecast of 43.95 million—due to greater sugarcane allocation to ethanol amid elevated gasoline prices. Meanwhile, Datagro recently adjusted its 2026/27 global surplus outlook to a deficit of 3.17 million metric tons, while StoneX forecasts a deficit of 550,000 metric tons for the 2026/27 season—the first deficit in several years.

Brazil’s Conab anticipates 2026/27 sugar production of 43.952 million metric tons, down 0.5% from the previous season, while ethanol output is expected to rise 7.2% to 29.259 million liters. The USDA forecasts Brazilian sugar production of 42.5 million metric tons for 2026/27, a 3% decline, citing increased ethanol focus.

Supply concerns from the ongoing Hormuz Strait closure—estimated to reduce global sugar trade by 6%—add floor support. Additionally, India maintains a ban on sugar exports through September 30, 2026, to safeguard domestic supplies.

Indian sugar production for October 15 of the 2025-26 season reached 27.48 million metric tons, up 7.7% year-over-year. ISMA revised India’s 2025/26 production forecast to 32 million metric tons and expects exports of 800,000 metric tons. The USDA projects India will return to surplus territory in 2026/27 with 2.5 million metric tons of excess supply.

The USDA’s December forecast projects record global 2025/26 production of 189.318 million metric tons and human consumption of 177.921 million metric tons. It expects ending stocks to fall 2.9% to 41.188 million metric tons. Brazilian production is forecast at 44.7 million metric tons, while Indian output is projected at 35.25 million metric tons—up 25% on favorable monsoons—and Thai production at 10.25 million metric tons.

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