May NY world sugar #11 (SBK26) today decreased -0.14 (-0.89%), and May London ICE white sugar #5 (SWK26) decreased -5.30 (-1.16%).
Sugar prices ended early today and fell after the dollar index ($DXY) rallied to a 10.5-month high that led to a long finish in sugar futures.
Sugar prices are also under upward pressure since last Friday amid peak sugar production in Brazil, as sugar mills divert sugarcane processing from sugar to ethanol. Unica reported last Friday that sugar output in Center-South 2025-26 (October to mid-March) increased +0.7% y/y to 40.25 MMT, sugar mills increasing the amount of cane processed to 50.61% from 48.08% last year.
Sugar prices started higher today, with NY sugar posting a 5.5 month high and London sugar posting a 6 month high, driven by the strength of crude oil prices (CLK26). Crude oil rose more than 3% today, boosting ethanol prices and potentially prompting sugar mills around the world to increase ethanol production and curb sugar output.
Sugar prices also have some support amid supply disruptions since the closure of the Strait of Hormuz. According to Covrig Analytics, the closure of the strait blocked about 6% of the world’s sugar trade, suppressing the export of refined sugar.
Earlier this month, sugar prices fell to a near 5.5-year low on concerns that the global sugar glut will continue. On February 11, analysts at sugar trader Czarnikow said they expected a global sugar surplus of 3.4 MMT in the 2026/27 crop year, following a surplus of 8.3 MMT in 2025/26. Also, Green Pool Commodity Specialists said on January 29 that they expect a global sugar surplus of 2.74 MMT in 2025/26 and a surplus of 156,000 MT for 2026/27. Meanwhile, StoneX said on February 13 that it expects a global sugar build-up of 2.9 MMT in 2025/26.
The International Sugar Organization (ISO) on February 27 forecast a +1.22 MMT (million metric ton) sugar surplus in 2025-26, following a deficit of 3.46 MMT in 2024-25. ISO said the surplus was driven by increased sugar production in India, Thailand and Pakistan. ISO forecasts a +3.0% y/y increase in global sugar production to 181.3 million MMT by 2025-26.
The Indian Sugar and Bio-energy Manufacturers Association (ISMA) reported last Tuesday that India’s sugar production for 2025-26 from Oct 1-Mar 15 rose +10.5% year-on-year to 26.2 MMT. On March 11, ISMA forecast India’s 2025/26 sugar production at 29.3 MMT, up 12% y/y, below the previous forecast of 30.95 MMT. ISMA also cut its estimate of sugar used for ethanol production in India to 3.4 MMT from July’s forecast of 5 MMT, which may allow India to increase its sugar exports. India is the second largest producer of sugar in the world.
Sugar prices are falling amid prospects for higher Indian sugar sales. On February 13, the Indian government approved an additional 500,000 MT of sugar for export in the 2025/26 season, on top of the 1.5 MMT approved in November. India is introducing a quota system for sugar exports in 2022/23 after recent rains reduced production and limited domestic supplies.
The USDA, in its annual report released on December 16, predicted that 2025/26 global sugar production will increase +4.6% year-on-year to a record 189.318 MMT and that global human consumption of sugar for 2025/26 will increase +1.4% year-on-year to a record 177.921 MMT. The USDA also forecast that 2025/26 finishing sugar stocks will decrease by -2.9% year-on-year to 41.188 MMT. USDA’s Foreign Agricultural Service (FAS) has predicted that Brazil’s sugar production for 2025/26 will increase by 2.3% each year to a record 44.7 MMT. FAS also forecast that India’s sugar production for 2025/26 will increase by 25% y/y to 35.25 MMT, driven by good monsoons and increased sugar acreage. In addition, FAS predicted that Thailand’s 2025/26 sugar production will increase by +2% year-on-year to 10.25 MMT.
As of the date of publication, Rich Asplund did not have (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com
