Global sugar prices are expected to remain soft in the coming months due to rising production and rebuilding stocks, said Edward Nikulin, a commodities and weather-model analyst at Mind Money.
“Key upside risks stem from weather shocks (El Niño/La Niña transitions) and energy-price volatility affecting Brazil’s ethanol mix,” he said in an analysis.
India’s export policy remains the main short-term driver of volatility.
Global sugar market overview
The 2024-25 global sugar output is set for expansion, primarily fueled by a record harvest in Brazil and a significant rebound in India.
However, it’s important to note that sugar trade patterns remain vulnerable to policy changes and weather conditions throughout Asia.
Despite maintaining high cane yields, India limits sugar exports to 1 million tons through a quota system to safeguard domestic supply.
“Any increase in the quota could temporarily add sugar to the global market and soften prices, yet the effect is expected to be short-lived given India’s large internal demand,” Nikulin said.
Brazil maintains its dominance in global exports, benefiting from good weather in São Paulo and Paraná, which allows for flexible allocation of sugarcane between sugar and ethanol production.
Conversely, Thailand’s export capacity and cane yields are being constrained by persistent dryness due to El Niño.
Meanwhile, China continues to be a consistent importer of these commodities.
Meanwhile, sugar supplies for the US and Mexico are expected to remain adequate through the 2025-26 period, according to the USDA WASDE report.
The US maintains stable, near-record production. US imports vary based on tariff-rate quotas, and exports are negligible.
Mexico, which relies entirely on cane sugar, is experiencing modest growth in production and steady domestic consumption, leaving its inventory levels relatively consistent, according to Nikulin’s analysis.
Trade flows
Brazil, India, and Thailand are the primary drivers of global trade, with the European Union and the United States consistently functioning as net importers.
Import demand for sugar is heavily concentrated in China and Indonesia.
With Brazil and India collectively producing over 40% of the world’s sugar, the global market is extremely vulnerable to their respective export policies and weather conditions, Nikulin added.
India’s record-high sugar production, alongside tight export restrictions, adds another layer to the global market.
Nikulin said:
A larger quota could modestly pressure prices downward, but strong domestic use and stock-management policies would cap the effect.
Meanwhile, Brazil holds price leadership in the global market, benefiting from any Indian export restrictions due to its logistical advantages and scale.
Also, global prices could be supported by Thailand’s drought-limited output.
Should India increase its exports, it is expected to only slightly alleviate the current market tightness in Asia, Nikulin noted.
Additionally, the analysis also noted that Brazil will remain the top sugar-producing nation in the world throughout 2026.
India will be the second-largest producer, followed by the European Union, China and Thailand.
“Though Thailand’s share could decline if dry conditions persist,” Nikulin said.
Persistent El Niño dryness curbs cane yields and exports, limiting its (Thailand) role as the third-largest exporter.
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