Brazil’s sugar production hit a five-year high in early August, while Europe’s 2025/26 campaign began with oversupply and subdued trade.

Raw sugar prices in New York fell 1.6% during the week as Brazil’s crushing pace and high sugar mix reinforced ample supply expectations. In contrast, refined sugar No. 5 rose 0.6%, widening the white premium. Net-short positions by funds continue to weigh on market sentiment, keeping the short-term outlook bearish.

Brazil’s strong output and shifting mix

Brazil’s Center–South mills processed 47.6 million metric tons of cane in the first half of August, up 8.2% from last year. Sugar output rose 16% to 3.62 million metric tons, the highest early-August production in five years. Mills allocated 55% of cane to sugar compared to 49.2% last year, even though ATR levels fell 4.2%.

Ethanol production declined by 5.2%, with hydrous output dropping 13%, while anhydrous volumes increased 8.6%. Brazil’s sugar exports reached 2.81 million metric tons in the first 16 working days of August, nearly matching last year’s levels. Despite this strong output, lower yields and TRS are prompting downward revisions to production estimates.

Europe starts new campaign with oversupply

The 2025/26 European campaign has begun with early factory starts and smooth processing. Beet harvesting has already started in Poland, Germany, Sweden, Denmark, Finland, Slovakia, France, and the UK. Favorable conditions are supporting abundant availability, with EU+UK supply estimated at 16.6–16.8 million metric tons.

Prices across Europe remain steady: €580/mt in Germany and the Netherlands, €540 in Poland, and €620 in Spain. However, oversupply and weak global prices are limiting near-term upside. Buying activity is emerging gradually, but sentiment remains cautious.

Planting signals suggest future concerns

Contract adjustments highlight potential acreage reductions for 2026. British Sugar set 2026 contracts at £30/t, below France’s farmer breakeven of €38/t, while Nordzucker plans 10–16% cuts in Sweden. These moves indicate that planting intentions may decline in the next cycle, though they offer no immediate relief to the current oversupply.

This article is part of our sugar market analysis. For the full market analysis, go to: https://app.vespertool.com/market-analysis/2245