The international sugar prices have breached 4-year lows at Tuesday’s close. The development may not be seen as welcome news for the Indian industry at this point, which is hinging on exports of 20 lakh tons of sugar, to manage the surplus sugar availability in the domestic market.
The Brazilian factor
Claudiu Covrig, Senior Market Analyst & Founder of CovrigAnalytics, said that the reason for the recent market move is that funds were selling, especially in sugar.
“In Brazil, when sugar output is at a maximum, prices tend to fall, so funds took that as a signal to sell. Brazil is producing more and more sugar, which is weighing down the prices”, said Covrig.
He said that the output is flush from Brazil; however, there is not much international demand, which indicates a possible production glut.
“On top of that, China has already finished its sugar import quota for the year. They might have bought 5.0-5.1 mil mt of raws (~3 mil of AIL, 1.8-1.85 M mt of in-quota raws and the remainder as carry stocks into 2026 to be custom cleared by Apr-May 2026). Indonesia also has good internal crop, hence it’s not buying at international supplies”.
Price outlook
Looking ahead, he said that once Brazil finishes its sugar production, the market could become more supportive, though not strongly bullish.
“Once CS Brazil finishes its sugar production around H1 December and sugar stocks suffer a significant drop by Jan, the market could become more supportive. Moreover, the origins that will replace the missing Brazilian sugar are expected to be much more expensive in terms of sugar production costs (India, Thailand, Centrals, Aussie),” he concluded.
