Sugar price reaches lowest point in five years

Sugar is in a downward spiral on the futures markets of London and New York. Last week, prices dropped to the lowest point in five years. Good sugar yields are not exclusive to Dutch beet growers. On the New York exchange, the price for sugar fell to 14.11 cents per pound, the lowest level since October 2020. In London, white sugar dropped to $412.90 per tonne. That is the lowest price since December 2020. In the Netherlands, it was a good growing season for sugar beets. Due to the high sugar yields, Cosun was forced last week to lower the allocation percentage to 90%. When we look more broadly at the sugar market, that is not even such a strange thought. The weather for growing sugarcane in the major production regions Brazil, India, and Thailand is relatively favorable. Yields of sugarcane there could also be good. At the same time, oil prices are under pressure, making Brazilian sugarcane processors less inclined to process sugarcane into ethanol. Record amounts of sugar in Brazil The Brazilian institute Conab raised its estimate for the sugar harvest 2025/26 to 45 million tonnes. That is a record. The sugar mills in the central-south region of the country processed 1.3% more cane into sugar in the first half of October than a year earlier. Of the processed sugarcane, 48.2% was used for sugar production compared to 47.3% last year. Market bureau Datagro expects that Brazil will achieve another record harvest in the 2026/27 season, with an increase of nearly 4%. This upward trend puts pressure on the world market, especially now that India and Thailand also expect higher productions. India and Thailand increase production India, the second-largest producer in the world, raised its production forecast for 2025/26 to 31 million tonnes, over 18% more than the previous season. The favorable monsoon with 8% more rainfall and an expansion of the sugarcane area are the main causes for the good harvest. At the same time, India is reducing the amount of sugar used for ethanol production, which could make extra export volumes available. Thailand, the third producer and second exporter globally, expects an increase of 5% to 10.5 million tonnes of sugar in 2025/26. Oil and ethanol pressure demand Falling oil prices strengthen the pressure on the sugar market. In Brazil, where the choice between ethanol and sugar production heavily depends on the oil price, the current situation encourages sugarcane processors to produce more sugar. In India, the lower ethanol demand also results in more sugar going towards export markets.