Sugar futures fell on Tuesday, with weakness extending across both U.S. and London contracts. March New York world sugar 11 eased and March London ICE white sugar 5 also declined, as crude oil slid to fresh multi-year lows—pressuring energy-linked ethanol economics and raising expectations that more sugarcane may be routed toward sugar output instead.
Key takeaways
- Price move: March world sugar 11 and March ICE white sugar 5 both traded lower.
- Catalyst: A drop in WTI crude to a 4.75-year low weighed on sugar via weaker ethanol incentives.
- Supply signals: Reports pointing to higher production in India and Brazil added to the bearish backdrop.
- Market implication: Forecasts of a larger global surplus for 2025-26 strengthened expectations for softer prices.
- Key uncertainty: Any shift in export policies or confirmation that ethanol diversion is less supportive for sugar supply could affect direction.
What drove the move
Crude oil’s sharp decline was a central near-term pressure point for sugar. According to market commentary, WTI crude sank to a 4.75-year low, which can undermine ethanol prices. Lower ethanol economics may influence how sugar mills allocate cane between ethanol and sugar—potentially increasing sugar availability and weighing on futures.
Sugar had also been under pressure after a string of supply-positive updates. On Monday, the India Sugar Mill Association (ISMA) reported that Indian sugar production from Oct. 1 to Dec. 15 jumped 28% year over year to 7.8 million metric tons. That set the tone for broader expectations of heavier output.
In Brazil, multiple agencies and mill trackers pointed toward resilient production. Conab, Brazil’s crop forecasting agency, raised its Brazil 2025/26 sugar production estimate to 45 million metric tons from 44.5 million previously, citing improving expectations for the season. Separately, Unica reported that cumulative 2025-26 Center-South sugar output through November increased 1.1% year over year to 39.904 million metric tons. Unica also said cane crushed for sugar rose to 51.12% in 2025/36 from 48.34% in 2024/25, reinforcing the case for more sugar rather than ethanol.
Market reaction and supply outlook
Alongside the day’s energy-driven move, published balance-sheet forecasts remained a key reason investors were reluctant to press higher in sugar.
According to the International Sugar Organization (ISO), a 1.625 million metric ton surplus is expected for 2025-26, following a 2.916 million metric ton deficit in 2024-25. ISO said the surplus is supported by increased sugar production in India, Thailand, and Pakistan. The forecast also called for global sugar production to rise 3.2% year over year to 181.8 million metric tons in 2025-26, implying that supply growth is expected to outpace consumption.
Other traders’ forecasts echoed the same direction. Czarnikow, in a Nov. 5 update, increased its global 2025/26 sugar surplus estimate to 8.7 million metric tons from 7.5 million in a September estimate.
At the same time, investors were weighing developments in India that could increase export availability. ISMA raised its 2025/26 India sugar production estimate to 31 million metric tons from 30 million, an 18.8% year-over-year increase. ISMA also cut its projection for sugar used for ethanol in India to 3.4 million metric tons from a July forecast of 5 million, which could leave more sugar available for shipment.
Further, the National Federation of Cooperative Sugar Factories projected India’s 2025/26 sugar production could rise 19% year over year to 34.9 million metric tons, citing larger planted cane acreage. This followed a 17.5% year-over-year decline in India’s 2024/25 production to a five-year low of 26.1 million metric tons, as cited by ISMA.
Exports, competing crops, and policy signals
While the production outlook leaned bearish for prices, export policy offered limited support. According to India’s food ministry, it would allow mills to export 1.5 million metric tons of sugar in the 2025/26 season, below earlier estimates of 2 million. India introduced an export quota system in 2022/23 after late rains reduced production and constrained domestic supply. For traders, the implication is that exports may not fully absorb the higher output immediately, depending on how the quota is administered and whether domestic demand tightens.
Thailand’s production outlook also remained a headwind. The Thai Sugar Millers Corp projected Thailand’s 2025/26 sugar crop would increase 5% year over year to 10.5 million metric tons. Thailand is the world’s third-largest producer and second-largest exporter, meaning stronger production there can influence global price discovery.
In the broader context, a May projection from the USDA’s Foreign Agricultural Service pointed to a record production and a build in ending stocks. The USDA projected global 2025/26 sugar production would increase 4.7% year over year to 189.318 million metric tons, with consumption rising to a record 177.921 million metric tons. It also forecast ending stocks rising 7.5% year over year to 41.188 million metric tons. The USDA also estimated Brazil’s 2025/26 production at 44.7 million metric tons and India’s at 35.3 million metric tons, driven in part by favorable monsoon rains and increased acreage, while projecting Thailand’s production at 10.3 million metric tons.
Bigger picture: what to watch next
With energy prices a key near-term driver, investors will likely watch crude oil’s trajectory for further signals on ethanol incentives and cane allocation. On the sugar-specific calendar, attention remains on export policy implementation and any revisions to production and harvest conditions in major origins such as Brazil and India. Additional supply-demand updates—along with ongoing confirmation of ethanol diversion assumptions—could further shape whether today’s weakness extends or stabilizes.
