Sugar prices lost early gains on Thursday, settling lower as a stronger dollar triggered long liquidation in sugar futures. The dollar index ($DXY) reached a 3.5-week high, putting pressure on most commodity markets, Barchart reported.
Earlier, on Wednesday, New York sugar had climbed to a one-week high after data suggested lower sugar output in Brazil. The Brazilian Center-South region produced just 5,000 MT of sugar in the second half of January, down 36% compared to last year, according to Unica. Despite this short-term dip, cumulative sugar production in the region for 2025-26 through January rose 0.9% year-on-year to 40.24 MMT. The proportion of cane crushed for sugar also increased to 50.74% from 48.14% in 2024-25.
Global sugar markets have been under pressure for months. Last Thursday, sugar prices fell to 5.25-year lows on concerns that a worldwide sugar surplus would continue. Analysts have projected significant global surpluses for the coming years. Sugar trader Czarnikow expects a 3.4 MMT surplus in 2026-27, following an 8.3 MMT surplus in 2025-26. Green Pool Commodity Specialists and StoneX have forecast similar surpluses for 2025-26 and 2026-27.
India’s sugar output is contributing to the bearish sentiment. The India Sugar Mill Association (ISMA) reported that from October 1 to January 15, India produced 15.9 MMT of sugar, up 22% year-on-year. The association has raised its 2025-26 production forecast to 31 MMT, up 18.8% from last year, aided by the strongest monsoon in five years. Lower estimates for sugar used in ethanol production could free up more sugar for exports, boosting India’s market presence. Recently, the Indian government approved an additional 500,000 MT of sugar for export in 2025-26, on top of 1.5 MMT previously cleared.
Brazil, the world’s largest sugar producer, is showing mixed signals for the market. Conab, Brazil’s crop forecasting agency, projected a record 45 MMT of sugar output in 2025-26, raising concerns over global oversupply. Conversely, consulting firm Safras & Mercado expects Brazil’s sugar production to fall nearly 4% to 41.8 MMT in 2026-27, with exports declining by 11% to 30 MMT, which could support prices in the longer term.
Other major producers are also increasing output. Thailand’s 2025-26 sugar crop is expected to rise 5% year-on-year to 10.5 MMT, and India’s production could jump 25% to 35.25 MMT. The USDA forecasts global sugar production in 2025-26 to reach a record 189.32 MMT, up 4.6% from last year, while global consumption is expected to rise 1.4% to 177.92 MMT. Ending stocks, however, may decline slightly to 41.19 MMT.
Overall, sugar prices face pressure from higher production in India, Brazil, and Thailand, combined with a stronger dollar. However, expected declines in Brazilian output and slower growth in future supply could provide some relief to the market in 2026-27.
