Domestic price of sugar

The domestic price of sugar is expected to fall by 26.3% in 2025-26 to 61.3 index points, caused by a global supply surge led by the world's largest producers, Brazil and India. Sugar production rose substantially in Brazil's key Centre-South region and lower domestic ethanol prices relative to international sugar prices led farmers to flood the global market with sugarcane. At the same time, favourable monsoon conditions boosted India's sugarcane harvest, while government Fair and Remunerative Price settings encouraged farmers to maintain high production levels. The resulting increase in global sugar supply led analysts to forecast a surplus for the 2025-26 season, placing downwards pressure on international prices and, in turn, lowering domestic sugar prices.

Domestic sugar prices are largely determined by global sugar prices, as over 80% of Australia's sugar production volume is destined for export markets. Since Australia is not a major producer of sugar like Brazil or India and does not significantly influence global supply, it is a price taker in the global sugar market. Average sugarcane yields can be heavily influenced by the amount and timing of rainfall. Fluctuating global sugar supplies have contributed to significant volatility in the domestic price of sugar. Growing conditions for sugar cane producers dictate the total sugarcane supply and sugar yields from cane. Global sugar production has risen over the past five years.

Sugar prices rose sharply in 2024 as global supply tightened due to adverse conditions in the world's two largest producers. In Brazil, severe drought, extreme heat and crop fires reduced sugarcane yields and created uncertainty around future production, pushing prices higher. At the same time, India faced poor weather conditions and policy-driven export restrictions, alongside increased diversion of sugarcane to ethanol production, further limiting global export supply. Together, these factors contributed to tight global stocks and price spikes through 2024. Since then, supply conditions have stabilised as production has improved in major producing regions and output has recovered, easing pressure on global markets and contributing to softer prices. Overall, IBISWorld forecasts the domestic price of sugar to surge at a compound annual rate of 1.4% over the five years through 2025-26.