Sugar prices rise due to adjustments in the commodity index.

Sugar Market Update: Prices Rise Amid Index Rebalancing

March contracts for New York world sugar #11 (SBH26) have increased by 0.08 points, or 0.53%, while March London ICE white sugar #5 (SWH26) is up by 2.00 points, or 0.47% today.

Sugar futures have continued their upward momentum this week, reaching their highest levels in a week. The rally is being fueled by anticipated index-driven purchases as major commodity indexes undergo their annual rebalancing. Citigroup estimates that the two largest commodity indexes, BCOM and S&P GSCI, will inject approximately $1.2 billion into sugar futures over the coming week as part of this process.

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Currency Movements and Global Production Trends

The recent appreciation of the Brazilian real has lent support to sugar prices, as a stronger real discourages Brazilian exporters from selling sugar abroad, potentially tightening global supply. On Tuesday, the real reached its highest value against the US dollar in a month.

Earlier this week, New York sugar futures touched their highest point in two and a half months, driven by forecasts of reduced sugar output from Brazil. According to Safras & Mercado, Brazil's sugar production for the 2026/27 season is expected to decline by 3.91% to 41.8 million metric tons (MMT), down from 43.5 MMT projected for 2025/26. The firm also anticipates Brazilian sugar exports to decrease by 11% year-over-year to 30 MMT in 2026/27.

India's Sugar Production and Export Policies

Last Friday, sugar prices dropped to two-week lows following reports of increased sugar output in India. The India Sugar Mill Association (ISMA) announced that sugar production from October 1 to December 31 for the 2025-26 season surged by 25% year-over-year to 11.90 MMT, compared to 9.54 MMT during the same period last year. Additionally, ISMA raised its 2025/26 production estimate to 31 MMT, up 18.8% from the previous year, and reduced its forecast for sugar allocated to ethanol production to 3.4 MMT, down from 5 MMT. This adjustment could enable India, the world's second-largest sugar producer, to increase its sugar exports.

Expectations of higher sugar exports from India have weighed on prices, especially after the country's food secretary indicated that the government may authorize additional exports to address domestic oversupply. In November, India’s food ministry announced that mills would be permitted to export 1.5 MMT of sugar during the 2025/26 season. India has maintained an export quota system since the 2022/23 season, following reduced production due to late-season rainfall.

Global Sugar Supply Outlook

Forecasts for record-breaking sugar production in Brazil are exerting downward pressure on prices. On November 4, Brazil's crop agency Conab raised its 2025/26 sugar output projection to 45 MMT, up from 44.5 MMT. Unica reported that cumulative Center-South sugar production through November for the 2025-26 season increased by 1.1% year-over-year to 39.904 MMT. The proportion of cane processed for sugar also rose to 51.12% in 2025/26, compared to 48.34% in the previous season.

The International Sugar Organization (ISO) predicted on November 17 that the global sugar market will shift to a surplus of 1.625 million MT in 2025-26, following a deficit of 2.916 million MT in 2024-25. This surplus is attributed to higher production in India, Thailand, and Pakistan, with global output expected to rise by 3.2% year-over-year to 181.8 million MT. Sugar trader Czarnikow also increased its global surplus forecast for 2025/26 to 8.7 MMT, up from 7.5 MMT estimated in September.

Thailand is also expected to see an increase in sugar production. The Thai Sugar Millers Corp projected on October 1 that the country’s 2025/26 crop will grow by 5% year-over-year to 10.5 MMT. Thailand ranks as the third-largest sugar producer and the second-largest exporter globally.

USDA Projections for 2025/26

According to the USDA’s bi-annual report released on December 16, global sugar production for 2025/26 is forecast to reach a record 189.318 MMT, a 4.6% increase year-over-year. Human consumption is also expected to hit a new high at 177.921 MMT, up 1.4%. However, global ending stocks are projected to decline by 2.9% to 41.188 MMT. The USDA’s Foreign Agricultural Service (FAS) anticipates Brazil’s sugar output will rise by 2.3% to a record 44.7 MMT, while India’s production is set to jump by 25% to 35.25 MMT, supported by favorable weather and expanded planting. Thailand’s output is also expected to rise by 2% to 10.25 MMT.