Slumping Crude Oil Pressures Sugar Prices

<p>May NY world sugar #11 (SBK26) on Monday closed down -0.18 (-1.25%), and May London ICE white sugar #5 (SWK26) closed down -1.30 (-0.31%).</p>
<p>Sugar prices were under pressure on Monday from weakness in crude oil prices. WTI crude (CLJ26) fell by more than -4% on Monday, undercutting ethanol prices and potentially prompting the world's sugar mills to divert more cane crushing toward sugar production rather than ethanol, thereby boosting sugar supplies.</p>
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<p>Earlier this month, sugar prices plunged to 5.25-year nearest-futures lows on concern that a global sugar surplus will persist. 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 2.74 MMT global sugar surplus for 2025/26 and a 156,000 MT surplus for 2026/27. Meanwhile, StoneX said February 13 that it expects a global sugar surplus of 2.9 MMT in 2025/26.</p>
<p>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.</p>
<p>Signs of lower sugar output in Brazil are supportive of sugar prices, after Unica on February 18 reported that sugar production in Brazil's Center-South in the second half of January fell by -36% y/y to only 5,000 MT. However, cumulative 2025-26 Center-South sugar output through January rose +0.9% y/y to 40.24 MMT.</p>
<p>The Indian Sugar and Bio-energy Manufacturers Association (ISMA) reported on March 6 that India's 2025-26 sugar output from Oct 1-Feb 28 was up +12% y/y to 24.75 MMT. Last Wednesday, the ISMA projected India's 2025/26 sugar production at 29.3 MMT, up 12% y/y, below an earlier projection of 30.95 MMT. The ISMA also cut its estimate for sugar used for ethanol production in India to 3.4 MMT from a July forecast of 5 MMT, which may allow India to boost its sugar exports. India is the world's second-largest sugar producer.</p>