Sugar futures ended lower on Monday, with May world sugar #11 and May London ICE white sugar #5 both slipping, as a sharp drop in crude oil weakened the outlook for ethanol-linked demand. The move came amid ongoing market debate over whether a global surplus will persist into the 2025/26 and 2026/27 seasons.
Key takeaways
- Price move: May world sugar #11 (SBK26) fell 1.25% and May London ICE white sugar #5 (SWK26) dropped 0.31% on Monday.
- Catalyst: Weakness in crude oil, including WTI’s more than 4% decline, pressured sugar prices via the ethanol-production link.
- Supply implication: Lower energy prices may encourage mills to favor sugar over ethanol, supporting sugar availability.
- Market context: Recent forecasts point to a potential global surplus across multiple crop years, while expectations of higher exports from India add further downside risk.
What drove the move
Sugar prices were under pressure Monday after crude oil weakened. According to the report, WTI fell by more than 4% on the day, which can reduce the profitability of ethanol production relative to sugar output. That dynamic matters because higher ethanol incentives can pull more cane and sugar toward biofuel, tightening sugar supplies; conversely, weaker crude can tilt decisions back toward sugar.
Investors also appeared to focus on the broader supply outlook. Earlier this month, sugar prices dropped to 5.25-year nearest-futures lows as traders weighed forecasts of a continuing global surplus.
Surplus forecasts and the supply-demand outlook
Multiple industry estimates cited in the article suggest large surplus swings across crop years. According to sugar trader Czarnikow, a global surplus of 3.4 million metric tons is expected in the 2026/27 season, following an 8.3 million metric ton surplus in 2025/26. Green Pool Commodity Specialists projected a 2.74 million metric ton surplus for 2025/26 and a 156,000 MT surplus for 2026/27. StoneX, in a February 13 estimate, expected a 2.9 million metric ton surplus for 2025/26.
The International Sugar Organization (ISO) also pointed to surplus conditions, forecasting a +1.22 million metric ton surplus in 2025-26 after a -3.46 million metric ton deficit in 2024-25. The ISO attributed the surplus to increased production in India, Thailand, and Pakistan, and it forecast a 3.0% year-over-year rise in global production to 181.3 million metric tons in 2025-26.
Production signals: Brazil and India
Even with the surplus narrative, the article highlighted select production developments that traders may weigh against the larger supply picture.
In Brazil, Unica reported that sugar production in the Center-South region during the second half of January fell 36% year over year to 5,000 MT. However, cumulative Center-South sugar output through January still rose 0.9% year over year to 40.24 million metric tons, suggesting any weakness may be offset by earlier production.
India’s output also remains central to expectations. The Indian Sugar and Bio-energy Manufacturers Association (ISMA) reported that India’s 2025-26 sugar production from Oct. 1 to Feb. 28 rose 12% year over year to 24.75 million metric tons. ISMA projected India’s 2025/26 production at 29.3 million metric tons, up 12% year over year but below an earlier projection of 30.95 million metric tons.
ISMA also reduced its estimate for sugar used for ethanol production in India to 3.4 million metric tons from a July forecast of 5 million metric tons. If accurate, the lower ethanol allocation could free up more sugar for export, which the article notes would weigh on prices.
Export expectations and ethanol-linked demand
The article pointed to additional pressure from the prospect of higher Indian exports. On February 13, India’s government approved an extra 500,000 MT of sugar for export for the 2025/26 season, adding to 1.5 million MT approved in November. The country introduced export quotas in 2022/23 after late rains reduced production and constrained domestic availability.
Broader U.S. forecasts in the article also lean supportive of supply. The USDA’s biannual report released December 16 projected record global production for 2025/26, with production up 4.6% year over year to 189.318 million metric tons and human consumption rising 1.4% to 177.921 million metric tons. It also projected ending stocks would fall 2.9% year over year to 41.188 million metric tons. The report further predicted Brazil production at 44.7 million, India production at 35.25 million, and Thailand production at 10.25 million for 2025/26.
Bigger picture: what to watch next
With sugar futures reacting Monday to the energy complex, traders are likely to monitor crude oil’s direction for clues on ethanol demand versus sugar output. Attention will also remain on export approvals and production updates from major suppliers like Brazil and India, alongside upcoming USDA and International Sugar Organization revisions that could reshape surplus expectations over the coming weeks.
