Sugar prices took a hit today, with May NY world sugar #11 (SBK26) down by -0.13 (-0.90%) and May London ICE white sugar #5 (SWK26) down by -5.60 (-1.34%). This decline comes after reaching a 2-month high on Monday, as long liquidation pressure weighed on the market. Additionally, the slightly higher dollar today added bearish sentiment to sugar prices.
Despite a 4% rally in oil prices, which typically supports sugar prices, sugar is trading lower. The rise in crude oil prices usually boosts ethanol prices, leading sugar mills to shift their focus from sugar to ethanol production. This diversion reduces sugar supplies in the market.
On February 12, sugar prices hit 5.25-year lows due to concerns about a global sugar surplus. Analysts from sugar trader Czarnikow projected a 3.4 MMT surplus in the 2026/27 crop year, following an 8.3 MMT surplus in 2025/26. Green Pool Commodity Specialists and StoneX also forecasted global sugar surpluses for the coming years.
The International Sugar Organization (ISO) predicted a +1.22 MMT sugar surplus in 2025-26, driven by increased production in India, Thailand, and Pakistan. However, signs of lower sugar output in Brazil, notably a -36% y/y decline in sugar production in Brazil’s Center-South in January, are providing some support to sugar prices.
India, the world’s second-largest sugar producer, reported a 12% y/y increase in sugar output for the 2025-26 season. The Indian Sugar and Bio-energy Manufacturers Association (ISMA) projected a total production of 29.3 MMT, down from an earlier estimate of 30.95 MMT. The ISMA also reduced its forecast for sugar used for ethanol production, potentially allowing India to boost sugar exports.
India’s increased sugar exports, with the government approving an additional 500,000 MT for export, are contributing to the downward pressure on sugar prices. The USDA’s projections for record global sugar production and consumption in 2025/26, along with declining ending stocks, are also influencing market dynamics.
Overall, the sugar market continues to face challenges from oversupply concerns, despite some supportive factors like lower output in key producing regions. Investors will be closely monitoring global production trends and export dynamics to gauge future price movements in the sugar market.
