With the Indian Government allowing the export of 15 LMT of sugar, the domestic sugar industry expects prices to stabilise and find support.
Saira Ali, Sugar Analyst with GlobalData Agri, said that investment funds are still betting that international sugar prices will fall and will maintain this position until year-end. The prices could keep falling for a while before stabilising or rising later.
Q. Reasons for the low sugar prices?
Ans: Prices have most likely been driven down further over the past month by the speculative funds, who are thought to have increased their net short position to ~210-220k lots, despite no official CFTC reports being released due to the US government shutdown.
Prices have also fallen against the backdrop of strong production results from Centre/South Brazil over the past month, with ATR levels holding up strongly and cumulative sugar output now surpassing last year.
Even though tight global supply conditions are still expected in Q4/Q1, the market is also looking ahead to looming surpluses from Q2 2026 due to a positive outlook for cane/beet crops in the northern hemisphere following excellent weather this year and a larger Brazilian crop in 2026/27.
Q. Outlook for sugar prices in the next few months- December to April 2026?
Ans: There are reasons to believe that prices could find some support from their current low levels over the coming months. Prices are now trading at a level close to our projections of ethanol parity in Brazil next year, i.e., the floor for the market, bringing into question sugar mix expectations for the 2026/27 harvest.
They are also well below the level needed to incentivise Indian exports next year, which seem unlikely currently, despite millers being granted 1.5 million tonnes of exports. Moreover, with the funds still holding a large net short position, one cannot discount a change in their investment strategy, although this may not happen until they rebalance their positions at the end of the year, meaning it is still possible that prices could drift lower in the near term.
Moreover, any price recoveries are likely to be jumped upon by Brazilian (and Thai) millers still to make their export fixations for next year.
Q. Key factors guiding the international prices?
Ans: The final 2025/26 production results in Centre/South Brazil and the weather during Q1 2026 for the development of their 2026/27 crop. Progress of the 2025/26 harvests in the northern hemisphere.
The outlook for the ethanol market in Brazil as sugar prices are linked to the ethanol price in Brazil (ethanol parity), which in turn will be influenced by world fuel prices, the Brazilian/US$ exchange rate and the outlook for the ethanol supply/demand balance (e.g., how much will be produced from corn). Speculative fund behaviour.
Q. Your expectation of the next crop- Brazil, China and Thailand?
Ans: Our 2025/26 production estimate for Centre/South Brazil is ~40 million tonnes, for India our sugar production estimate is ~31 million tonners and for Thailand it is ~10.5 million tonnes.
