Porto Alegre, October 28th, 2025 – At the beginning of October, the USDA attaché in Brazil anticipated the country’s supply and demand data, which will only be published on November 20 by the entity in its second biannual update of 2025. As a result, the sugar market received an important update from one of the main international players.
In this context, SAFRAS & Mercado warns of the strong bearish tone that this second estimate of the year exerted on the market. This is because fundamentals show a scenario of larger production, lower domestic demand, and higher exports. It is no coincidence that the first half of October is marked by the resumption of the medium-term downward trend by the current March/25 driver in New York, which even lost the low of 16 cents.
The second estimate of the year highlights the expected increase in exports for the current 2025/26 season, which will be 3% higher than the previous crop (35.70 against 34.50 mln tons). Despite this, SAFRAS & Mercado points out that compared to the first estimate of the year, USDA made a slight cut of 100,000 tons, or a decrease of only 0.28%, compared to the 35.80 mln tons initially expected for exports.
However, we warn that the 100,000-ton reduction from the first to the second estimate of the year did not generate any upward impact on market prices, given that the comparison with the previous crop showed an increase of 1.2 mln tons, which is the most impactful figure in the current USDA data for Brazil, in the view of SAFRAS & Mercado. Other points reinforce this interpretation, such as production and domestic demand.
This is because production is expected to rise by 0.88% over the previous season, with an increase of 386,000 tons, up from 44.00 to 44.38 mln tons. This is another downward pressure on prices in New York because international agents have been observing the comparison with the previous crop more than the comparison with the first report of this year published by USDA in May. Especially since, from this perspective, the adjustment is downward in almost equal proportion, with a reduction of 314,000 tons, or -0.70%, with the estimate falling from 44.70 to 44.38 mln tons. Another point that reinforces the downward pressure on international prices is the issue of domestic demand, which is expected to fall by 5.26% from the previous year, with a reduction of 500,000 tons, with consumption falling from 9.5 to 9.0 mln tons.
An interesting point here is that there was an upward adjustment compared to the first survey of the year, of nearly 100,000 tons, or +1.12%, with volumes rising from 8.90 to the current 9.0 mln tons. Once again, SAFRAS & Mercado warns that international agents have focused more on the comparison with the previous crop than with the first report of this year. From this perspective, the influence is bearish for New York, as the lower the domestic demand in Brazil, the greater the exportable surplus and the greater the availability of Brazilian sugar on the international market, which already has a surplus that has increased by 114% between the current 2025/26 season and the previous 2024/25 season, rising from 5.3 to 11.3 mln tons (data still from the first report in May of this year).
In addition, SAFRAS & Mercado points out that the domestic demand data estimated in May of this year by USDA, of 8.9 mln tons, proved to be excessively below all historical comparison standards of the last 20 years. The 9.0-mln-ton mark itself is considered very low, far from the 10-mln-ton benchmark that has guided the behavior of domestic demand for the last 5 years, which has generated a strong negative impact on crystal sugar prices in 2025.
However, from October onwards, SAFRAS & Mercado’s assessment is that this upward adjustment in the USDA’s projection between the first and second reports of the year will show that the situation is not so serious. This, along with the seasonal increase in domestic demand that occurs at the end of each year, could lead to a recovery in crystal sugar prices in the physical market.
