Global excess expectations are suppressing sugar prices, making them "unsweet". New York raw sugar futures fell to their lowest level in five years.

Due to the increasing negative impact of the expected global oversupply, the price of New York raw sugar futures has fallen to the lowest level in five years, deepening the sharp decline seen in yesterday's trading session. The most active raw sugar futures contract fell by 2.43% at one point on Thursday to 14.07 cents per pound. As of this month, the price of raw sugar futures has fallen by 14%, on track to achieve the largest monthly decline since December 2023. Rafael Crestana, Senior Risk Management Consultant at StoneX Group Inc., wrote in a report that the significant drop in October highlights the "significant pressure" that futures prices are currently under. Crestana stated that one of the pressures driving down prices is the anticipated oversupply of 2.8 million tons of raw sugar for the 2025/26 fiscal year. Following the "Sugar Week" event in Brazil, market estimates of a sugar oversupply for the 2025/26 fiscal year have been consistently increased. Michael McDougall, CEO of McDougall Global View, stated in a report, "Three weeks ago, our consensus estimate was 2 million tons, and it has now been raised to 2.77 million tons. We may need to further increase it." Wall Street analysts generally expect that industry leader Brazil will continue to produce sugar at high levels in the 2025/26 fiscal year; many investment institutions have raised their expectations for sugar production and exports in central-southern Brazil, and the country's high proportion of "sugar from sugarcane" ("high sugar content") is still highthis directly increases global spot and forward supply, lowering prices. The latest outlook from the US Department of Agriculture (USDA/FAS) shows that global sugar production and ending stocks are expected to hit record highs in 2025/26, with Brazil's production and exports remaining at high levels. The core driving factors causing oversupply mainly include increased production/high sugar content in Brazil, continual growth in corn ethanol production, and the possibility of India resuming sugar exports this year. According to Crestana's research report, India's sugar exports may exceed StoneX's current estimate of 1.5 million tons. In addition, the "taste economics" shift brought about by the unprecedented weight loss drug trend led by companies like Novo Nordisk and Eli Lilly in recent years is also worth noting for raw sugar futures traders. The fast penetration rate of GLP-1 drugs in the US has been shown to significantly reduce consumption of sugary items such as candies and baked goods (with a reduction of around 6%10% in spending), dampening the growth rate and expectations of marginal demand. What is most sensitive to price changes is the "expectation" itselfwhen funds factor in the "shifting long-term demand curve" into pricing, price elasticity is amplified. The sharp fluctuations in the US dollar/Brazilian real exchange rate this year have also impacted Brazil's export pace, with exports more favorable during a weak Brazilian real, resulting in price pressure. The ongoing US government shutdown is also weighing on traders' pessimism towards the commodities market, as the US Commodity Futures Trading Commission (CFTC) has been unable to release the position data of large institutional investors and some speculators since September 23. In terms of the latest prices, New York raw sugar futures prices fell by 1.32%, trading at 14.23 cents per pound as of 7:30 am Eastern Time. London white sugar prices fell by 1.08%. In other commodities, cotton futures prices fell by 1.7%, while London cocoa prices remained nearly unchanged.