Sugar Market Analysis: Cost Pressures, Surplus Stocks, and Export Prospects Drive Uncertainty

The global sugar market is in a pivotal phase marked by rising cost pressures, robust supply, and heightened calls for supportive policy action. The Federation of Cooperative Sugar Factories has sounded the alarm, urging authorities to boost the minimum selling price of sugar by 25% from the current $34.93 per quintal. Their demands center on surging production costs driven by steeper raw material, labor, and transport expenses—factors that are increasingly straining the financial health of mills and their ability to ensure timely payments to sugarcane farmers. Beyond pricing, sector players are lobbying for a waiver of duties on 2 million (20 lakh) tons of sugar exports, arguing this relief is imperative given competitive global prices and the pressing need to clear swollen inventories.

With India forecasting this season’s production at about 33 million tons against domestic demand of 27.5 million tons, oversupply is exerting downward pressure on market prices and producer margins. These dynamics converge at a time when macroeconomic uncertainties and the outlook for major global exporters—including Brazil and Thailand—are adding new volatility to the world market. The potential recalibration of minimum pricing, export duty policy, and regional weather patterns will all play decisive roles for the remainder of the season, shaping not just market sentiment, but also the operational solvency of sugar mills and the economic wellbeing of growers.

📈 Prices & Market Overview

Product	Origin	Location	Delivery Terms	Latest Price (EUR/kg)	Prev. Price (EUR/kg)	Weekly Change	Update Date	Sentiment
Sugar granulated (ICUMSA 45)	LT	Mirijampole	FCA	0.51	0.52	-1.92%	2025-09-29	Bearish
Sugar granulated (ICUMSA 45)	LT	Mirijampole	FCA	0.51	0.52	-1.92%	2025-09-29	Bearish
Sugar granulated (ICUMSA 32)	GB	Norfolk	FCA	0.53	0.54	-1.85%	2025-09-25	Bearish

Market Sentiment: Prices across key European export hubs have continued to slide modestly (<-2% week-on-week), reflecting an environment of persistent oversupply and cautious short-term demand outlooks.

🌍 Supply & Demand Drivers

• Production: India’s sugar output is forecast around 33 million tons for the season, with consumption just 27.5 million tons. Similar surpluses are indicated in several EU and CIS countries, contributing to global stock build.
• Policy: Potential price floor adjustment and temporary export duty waivers are under active consideration in India—both would impact domestic and export dynamics.
• Exports: The competitiveness of global FOB prices for ICUMSA 45 encourages export activity, though regulatory decisions will be critical for actual flows.
• Inventories: High domestic and regional stocks are weighing on prices and mill liquidity. Sector calls for support focus on both inventory reduction and pricing stability.

📊 Market Fundamentals

• Cost Structure: Escalating input costs (cane, energy, labor—especially in India and Brazil) are eroding producer margins.
• Speculative Positions: Net speculative shorts on major exchanges (e.g., ICE) have risen, reflecting bearish market sentiment amid high supply.
• Comparative Performance: Prices have softened both in India and Europe compared to last quarter, as the pressure from surplus stocks intensifies.

☁️ Weather Outlook

• South & Central Asia: Monsoon rainfall has been erratic, but late-season precipitation supports crop fill, partially mitigating drought risks earlier in the season. Any renewed dry spell could cap further output gains.
• Brazil: Favorable weather through main cane regions continues to favor crush rates and sugar yield, contributing to heavy global supply.
• Thailand: Recent dryness is a concern, but not yet critical. Watch for updates in tail-end harvest phases.

Effect on Yields: Current weather supports ample supplies, but further disruptions (especially in Asia) could shift the outlook rapidly given tightness in other competing energy and food markets.

🏭 Global Production & Stocks

Country	2024/25 Output (est., mln tons)	Stocks (mln tons)	Major Trends
India	33	6-8	Policy-driven price/support debate
Brazil	41	3-4	Record-high crush, export-oriented
EU	16.5	2+	Soft despite stable demand
Thailand	10	2	Recovering after last season’s drought

💡 Trading Outlook & Recommendations

• Monitor Indian government actions on minimum price and export duties; these could quickly shift export availability and regional prices.
• Short-term risks remain skewed bearish due to high inventories and recent price declines.
• Downside for European/Asian physical prices seems limited below current levels absent further policy shocks or major weather issues.
• Watch weather in Asia for late-season crop risks; any unexpected adversity could firm spot prices.
• Exporters: consider forward sales in anticipation of policy relaxations but hedge for further downside if surplus persists.
• Importers: take advantage of current low prices for strategic stock-building, especially ahead of possible policy tightening or weather-driven shocks.

📆 3-Day Price Forecast (Key Exchanges)

Exchange/Market	Spot Price (EUR/kg)	Expected Range (3 days)	Sentiment
Europe (LT FCA Mirijampole)	0.51	0.50 – 0.52	Weak/Bearish
Europe (GB FCA Norfolk)	0.53	0.52 – 0.54	Weak/Bearish
ICE New York (No. 11, USD/LB)	~0.25 (spot)	0.24 – 0.26	Bearish

Short-term price action is likely to remain under pressure with little upward momentum unless export policy reforms or weather shocks emerge.