May NY world sugar #11 (SBK26) today is up +0.15 (+1.11%), and Aug London ICE white sugar #5 (SWQ26) is up +6.20 (+1.50%).
Sugar prices are moving higher today as a +2% rally in crude oil price (CLK26) sparked short covering in sugar futures. Higher crude prices boost ethanol prices and could prompt global sugar millers to divert more cane crushing toward ethanol production rather than sugar, thus curbing sugar supplies.
On Wednesday, NY sugar sank to a 5.5-year nearest-futures low. Sugar prices have been under pressure for the past two weeks amid expectations of abundant global supplies and tepid demand.
Wednesday’s expiration of the May London sugar contract saw 472,650 MT of deliveries settle the contract, the most for a May contract in 14 years, a sign of tepid demand.
The outlook for the global sugar surplus to persist is weighing on prices. On February 11, analysts from sugar trader Czarnikow said they expect a global sugar surplus of 3.4 MMT in the 2026/27 crop year, following an 8.3 MMT surplus in 2025/26. Also, Green Pool Commodity Specialists said on January 29 that they expect a global sugar surplus of 2.74 MMT for 2025/26 and 156,000 MT for 2026/27. Meanwhile, StoneX said February 13 that it expects a global sugar surplus of 2.9 MMT in 2025/26.
The International Sugar Organization (ISO) on February 27 forecasted a +1.22 MMT (million metric ton) sugar surplus in 2025-26, following a -3.46 MMT deficit in 2024-25. ISO said the surplus is being driven by increased sugar production in India, Thailand, and Pakistan. ISO is forecasting a +3.0% y/y rise in global sugar production to 181.3 million MMT in 2025-26.
Sugar prices also took a hit last Tuesday when India’s Food Secretary said the government has no plans to ban sugar exports this year, easing concerns that it could divert more sugar to make ethanol following the Iran war disruption to crude oil supplies.
Stronger sugar output in India is negative for sugar prices after India’s National Federation of Cooperative Sugar Factories Ltd. on April 2 reported that India’s 2025-26 sugar production from Oct 1-Apr 15 was up +7.7% y/y to 27.48 MMT.
Higher sugar production in Brazil is also bearish for sugar prices. On March 27, Unica reported that cumulative 2025-26 Center-South sugar output (October through mid-March) is up +0.7% y/y to 40.25 MMT, with sugar mills boosting the amount of cane crushed for sugar to 50.61% from 48.08% last year.
