Sugar prices rise thanks to the strength of crude oil

World #11 New York May White Sugar (SBK26) today is up +0.28 (+1.97%), and London #5 May ICE White Sugar (SWK26) is up +11.40 (+2.76%).

Sugar prices are rising today, with London sugar hitting a one-week high as higher crude oil prices encourage the world’s sugar mills to increase ethanol production at the expense of sugar. WTI crude oil (CLJ26) is up more than +2% today, boosting ethanol prices and potentially causing the world’s sugar mills to divert more cane crushing into sugar production instead of ethanol, thus boosting sugar supplies.

Earlier this month, sugar prices fell to 5.25-year lows in near futures on concerns that a global sugar surplus persists. On February 11, analysts at sugar trader Czarnikow said they expect a global sugar surplus of 3.4 MMT in the 2026/27 agricultural year, following a surplus of 8.3 MMT in 2025/26. Additionally, Green Pool Commodity Specialists said on January 29 that they expect a global sugar surplus of 2.74 MMT by 2025/26 and a surplus of 156,000 MT by 2026/27. Meanwhile, StoneX said on February 13 that it expects a global sugar surplus of 2.9 MMT in 2025/26.

On February 27, the International Sugar Organization (ISO) forecast a sugar surplus of +1.22 million metric tonnes (million metric tonnes) in 2025-26, following a deficit of -3.46 million tonnes in 2024-25. ISO said the surplus is due to increased sugar production in India, Thailand and Pakistan. ISO forecasts a +3.0% year-on-year increase in global sugar production to 181.3 million tonnes in 2025-26.

Signs of lower sugar production in Brazil support sugar prices, after Unica reported on February 18 that sugar production in South-Central Brazil in the second half of January fell -36% year-on-year to just 5,000 MT. However, the 2025-26 Central-South cumulative sugar production through January increased +0.9% year-on-year to 40.24 MMT.

The Indian Sugar and Bioenergy Manufacturers Association (ISMA) today reported that India’s sugar production in 2025-26 between October 1 and March 15 increased +10.5% YoY to 26.2 MMT. Last Wednesday, ISMA projected India’s sugar production in 2025/26 at 29.3 million tonnes, up 12% year-on-year, down from a previous projection of 30.95 million tonnes. The ISMA also lowered its estimate for sugar used for ethanol production in India to 3.4 MMT from a July forecast of 5 MMT, which could allow India to increase its sugar exports. India is the second largest sugar producer in the world.

Sugar prices are coming down amid prospects of higher sugar exports from India. On February 13, the Indian government approved an additional 500,000 MT of sugar for export for the 2025/26 season, in addition to the 1.5 MMT approved in November. India introduced a quota system for sugar exports in 2022/23 after late rains reduced production and limited domestic supplies.

The USDA, in its semi-annual report released on December 16, projected that global sugar production in 2025/26 would increase +4.6% year-on-year to a record 189,318 MMT and that global human sugar consumption in 2025/26 would increase +1.4% year-on-year to a record 177,921 MMT. The USDA also forecast that global sugar ending stocks in 2025/26 would fall -2.9% year-on-year to 41.188 million tonnes. The USDA’s Foreign Agricultural Service (FAS) predicted that Brazil’s sugar production in 2025/26 would increase 2.3% year-on-year to a record 44.7 million tons. FAS also predicted that India’s sugar production in 2025/26 would rise 25% year-on-year to 35.25 MMT, driven by favorable monsoon rains and increase in sugar acreage. Additionally, FAS predicted that Thailand’s sugar production in 2025/26 will increase +2% year-on-year to 10.25 MMT.

On the date of publication, Rich Asplund had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com