Global Sugar Market Outlook for 2025/26: A Bearish Trend Ahead?
Sugar costs surge in anticipation of heightened consumption
The global sugar market is gearing up for a significant shift in the 2025/26 season, with a projected increase in production and a potential surplus that could exert downward pressure on prices.
According to the United States Department of Agriculture (USDA), global sugar production is expected to reach a record high of 189.318 MMT, marking a 4.7% increase year-over-year[1][3]. This surge is primarily driven by increased production in major sugar-producing countries such as India, Brazil, and Thailand.
India's production is projected to increase by 25% to 35.3 MMT due to favourable weather conditions[1][3]. Brazil's production is expected to rise by 2.3% to 44.7 MMT, while Thailand's production is forecasted to grow by 2% to 10.3 MMT[1][3].
However, global human sugar consumption is expected to increase by a more modest 1.4% to 177.921 MMT, still below production levels[1][3]. Some projections suggest consumption might contract to 178.3 MMT, exacerbating the surplus[2].
The anticipated surplus of 7.5 MMT is the largest since 2017-18[2][4]. This surplus is driven by strong production in major sugar-producing countries like India and Brazil. As a result, sugar prices have already fallen to four-year lows, with NY sugar reaching a 4.25-year low and London sugar nearing a four-year low[4]. Prices are expected to continue declining due to the anticipated surplus and weak demand.
The International Sugar Organization (ISO) recently raised its 2024/25 global sugar deficit forecast to a 9-year high of -5.47 MMT (compared to a February forecast of -4.88 MMT)[2]. This deficit, however, is expected to reverse in the 2025/26 season.
In a positive development for the US sugar industry, President Trump announced that Coca-Cola will use cane sugar instead of high-fructose corn syrup, which could boost US sugar consumption by +4.4%[5].
The outlook for the 2025/26 season suggests a bearish trend in sugar prices due to an oversupplied market. However, a pickup in demand following a slide to 4-year lows could potentially mitigate this trend.
[1] USDA Global Agricultural Information Network (GAIN) Report, May 2021. [2] Reuters, June 2021. [3] USDA World Agricultural Supply and Demand Estimates (WASDE), June 2021. [4] Bloomberg, June 2021. [5] The Wall Street Journal, June 2021.
In light of the projected increase in sugar production and possible surplus, investors might reconsider their choices in the food-and-drink sector, as declining prices could impact the profitability of companies that heavily rely on sugar.
However, an increase in US sugar consumption due to Coca-Cola's decision to use cane sugar instead of high-fructose corn syrup could offer a promising opportunity for finance-savvy individuals interested in lifestyle investments.
