After years of supply shortages due to extreme weather, the global sugar market is poised for a little sweetness, with a potential surplus in the upcoming season. However, uncertainties could leave a bitter taste, as it remains to be seen whether this year will break the volatile trend, driven by climate risks, logistical challenges and shifting production levels in key regions such as Brazil and India.  

Brazil’s Centre-South region, the world’s largest sugar-producing area, is expected to produce 43.1 million tonnes of sugar, a 4 percent pick-me-up over the previous season. This growth is fuelled by the higher premium of sugar over ethanol and investments in crystallisation capacity, allowing for a greater sugar mix (51 percent from sugarcane) in the 2025/2026 season. Brazil’s sugar sector is forecast to maintain strong production levels despite the recent dry conditions. 

Meanwhile, a market intelligence analyst noted that “the harvest in India has been moving the market,” with its sugar production outlook revised downward from 30 million tonnes to between 27-27.5 million tonnes. Despite this shortfall, “there are already rumours of a super harvest in 2025/26, given that the monsoons last year stimulated planting and the country has excellent levels of water reserves.” If these expectations materialise, global sugar prices could decrease in the latter half of the year.  

“There are already rumours of a super harvest [in India] in 2025/26, given that the monsoons last year stimulated planting and the country has excellent levels of water reserves.” 

Market intelligence analyst, Brazil

The first quarter of 2025 is expected to face tighter supply due to Brazil’s off-season. Still, once production ramps up from April onwards, sugar availability will rise, challenging Brazil’s port infrastructure. The Port of Santos, Brazil’s largest export hub, is poised to play a crucial role, but concerns linger about its capacity to manage the surge in sugar shipments alongside record-high exports of soybeans and corn. “A soybean harvest exceeding 147 million tonnes and a corn harvest around 127 million tonnes, up from 114 million tonnes last year,” noted a commercial director. 

Expansion projects are underway, with the Chinese COFCO International set to open a new terminal at the Port of Santos in March 2025, increasing capacity to 14.5 million tonnes by 2026. “Freight prices will rise due to increased demand, inflationary pressure and the exchange rate, which is expected to remain depreciated.” The commercial director expanded, “The increase in demand will be caused by a greater volume of soybeans, corn and sugar,” with much of this additional capacity expected to be allocated to grain exports rather than the sweet stuff. 

With Brazil’s grain harvest projected at 322.3 million tonnes (an 8.2 percent increase from the previous year), “the first area where the increase in freight prices will be felt will be in road transport.” The director elaborated, “After road transport, rail transport will suffer an increase in price and given that traders have few rail transport contracts, I expect them to close on the spot.” The market analyst concurred, “Longer wait times at ports could lead to higher demurrage fees, impacting Brazilian sugar’s global competitiveness.”  

“Longer wait times at ports could lead to higher demurrage fees, impacting Brazilian sugar’s global competitiveness.” 

Market intelligence analyst, Brazil

“The ongoing US-China trade tensions could shift global grain demand toward Brazil, further straining internal logistics,” advised the commercial director. Financing challenges also present a potential hurdle, “domestic interest rates in Brazil remain high, nearing 15 percent.” This could lead to higher borrowing costs for sugar mills, potentially forcing some players to offload their sugar stocks at lower prices to maintain liquidity. 

Investors and international funds are bracing for a more “bearish outlook, particularly in Q3 and Q4,” reported our sources. While many expect large volumes of produce in the second half of the year, short positioning always carries risks. Unexpected supply disruptions could lead to sharp price swings, whether from adverse weather or policy changes. The market analyst explained, “International investors are closely monitoring Brazil’s harvest conditions and India’s production forecasts,” as any deviations from expectations could spark significant market movements. For now, the outlook is sugar-coated with cautious optimism, but stakeholders must stay sharp, ensuring their strategies are as sweet as their agility in navigating any potential market swings.