S&D and Trade Flow Update - 2026 03 03

Center-South bearish fundamentals have strengthened further. Improved Vegetation Health Index readings and realized crushing data prompted an upward revision in cane availability to about 610 Mt for 2025/26, from 605 Mt previously. Despite a lower sugar mix, now estimated at 50.6%, and a TRS of 137.8 kg/t, sugar production is expected to reach 40.5 Mt, keeping exports elevated at approximately 31.65 Mt.

Conab’s third estimate led to a downward revision in North-Northeast output for 2025/26. Sugar production is now projected at 3.6 Mt from 59.1 Mt of cane, with exports revised lower accordingly. For 2026/27, rainfall has been adequate so far, and we maintain a moderately optimistic outlook of 61 Mt of cane and 3.8 Mt of sugar.

A key structural trend in the region is the rapid expansion of corn ethanol. Output is expected to rise sharply in 2026/27, reaching between 1.5 and 1.7 B liters, supporting the region’s capacity to sustain higher sugar mixes despite price volatility.

India’s 2024/25 season closed with gross sugar production near 30 Mt and net output of 26.1 Mt after ethanol diversion. For 2025/26, early-season results confirm a strong recovery: sugar production between October and January was up 17% year-on-year, supported by higher crushing volumes and improved yields rates. Net production is now estimated at 31.1 Mt, with ethanol diversion projected at 3.7 Mt. The recent reduction in the sweetener’s output was due to heavy rains and early flowering possibly inducing lower yields.

Thailand’s recovery remains uneven. While rainfall during key development stages initially supported expectations of a stronger rebound, disease pressure — particularly white leaf, linked to restrictions on cane burning — led to a downward revision in cane output to 97 Mt. Sugar production for 2025/26 is now estimated at 10.6 Mt, representing an improvement year-on-year but still well below historical capacity.

EU+UK sugar production for 2025/26 is projected at 15.8 Mt after accounting for reduced harvested area and ethanol diversion, down from 16.5 Mt in 2024/25. Trade flows are expected to invert with imports rising to around 1.5 Mt and exports falling to approximately 1.0 Mt.

The EU–Mercosur agreement introduces limited duty-free access, including a 180 kt zero-tariff quota for Brazil and 10 kt for Paraguay. While modest in volume, these measures may intensify competitive pressure on the EU sugar sector and exacerbate existing structural vulnerabilities.

Mexico’s 2024/25 sugar production exceeded 4.7 Mt, supported by significant stock carryover that enabled exports above 1 Mt. For 2025/26, CONADESUCA expects production to rise by 10%, with yields recovering despite a slow start to the crushing season. Supply should reach 5.3Mt, while imports are expected to reduce and exports to increase, allowing stocks to stay close to average.  

US beet sugar production for 2025/26 is estimated at 4.63 Mt, the lowest level since 2020/21, reflecting acreage declines despite record yields. Cane sugar output was revised higher to 3.88 Mt, driven by strong results in Louisiana and Florida.

Even with these revisions, total US sugar production remains marginally below last season. Elevated carry-in stocks allow imports to fall sharply to around 2 Mt, reducing the stock-to-use ratio to approximately 14.5%.

Ukraine’s 2025/26 sugar production is expected to surpass 1.7 Mt, generating an exportable surplus of at least 700 kt. While EU restrictions remain a constraint, exports to global markets continue, and discussions aimed at increasing future EU quotas are ongoing.