The Market Monitor Minding the Nation's Business
Sugar prices dropped to a four-year low on Wednesday, with a pound trading at USD0.1626—a 4% decline from late May and a 15% plunge since the start of 2024.
Analysts attribute the price slide to rising expectations of a global supply boost, with the U.S. Department of Agriculture (USDA) projecting a 4.7% year-on-year increase in global sugar production for the 2025/26 season. Key producers like India, Thailand, and Brazil are expected to drive the surge.
Forecasts of stronger-than-usual monsoon rains in India and weakening demand from major buyers such as China, Indonesia, and Bangladesh have further weighed on prices. The ongoing Iran-Israel conflict has also sparked uncertainty over demand patterns.
Favorable weather conditions in major sugar-producing regions have helped crops thrive, leading to expectations of larger harvests.
“The simple explanation is good weather conditions in Asia, Central America, and Brazil, which are favoring crops and the production of sugar,” said Ole Hansen, head of commodity strategy at Saxo Capital.
Fastmarkets senior analyst Tore Alden pointed to a shift in Brazil’s ethanol industry, saying, “There has been a shift and growth in corn-based ethanol production in Brazil… there has probably been more sugar available for the export market from Brazil than in the past.”
He added that prices have also been affected by the end of several years of La Niña, which had previously disrupted agricultural production in South America.