Claudiu Covrig, Founder and Lead Analyst at Covrig Analytics, said, “In the sugar market, we have some bearish fundamentals at the moment. Brazil is producing a lot, and there is not too much demand, so demand is rather lagging.”
Covrig projected a global surplus of around 4.2 million tonnes in the next season, mainly driven by Brazil’s ongoing strong crop and expected recoveries in India and Thailand. However, he noted that this is a relatively modest surplus compared to past cycles. “We’ve had seasons with surpluses of 10 or 11 million tonnes,” he said.
India, in particular, is expected to carry significant stockpiles into the next season but may not be able to export them. “You cannot export 2026 sugar from India—there is a ban,” Covrig pointed out. “Indian sugar is also expensive to export—about 20 cents for raw sugar and about 21 cents for white sugar.”
The current season has seen several production disappointments globally, especially in India and Pakistan, adding to the imbalance in market fundamentals. However, with consumption continuing to lag, the overall price environment remains under pressure. “In India, for example, if you compare the numbers from last year to this year, we’ve lost 1 million tonnes of sugar consumption,” he noted.
Adding to the bearish sentiment, recent moves by Petrobras to lower petrol prices have pushed Brazil’s ethanol parity down to around 15 cents for some mills. This sets a new floor for sugar prices and influences Brazilian producers’ decisions on whether to shift towards ethanol or continue sugar output.
Meanwhile, broader geopolitical factors are also playing a role. The ongoing conflict in the Middle East has led to a spike in crude oil prices, which affects fund positioning in sugar markets. “Funds were about 90,000 to 95,000 lots short… but they still have a lot of room to go to 200,000 lots short,” Covrig said, noting that such volatility could force funds to reassess their risk exposure.
Even with the bearish tilt, Covrig emphasised that sugar is now trading based on its fundamentals rather than macro events. “Unless we see a reaction from Brazil, which now has 65% to 70% of the world’s trade in raw sugar, we will continue to see pressure,” he warned.
(Edited by : Ajay Vaishnav)
