Sugar futures pulled back on the day, with May New York world sugar #11 dropping and May London ICE white sugar #5 also sliding, as weakness in crude oil triggered long liquidation across the energy-adjacent complex. The decline comes after a recent rally in both markets, which had been supported by a rebound in oil prices earlier.
May world sugar #11 for delivery in May fell by 0.29, or 1.83%, while May London ICE white sugar #5 slipped by 6.90, or 1.49%, on the session. Market participants pointed to crude oil’s sharp move lower—down about 2%—as a near-term driver of the selloff in sugar.
Key takeaways
- Price move: May world sugar #11 fell 1.83% and May London ICE white sugar #5 declined 1.49% on the day.
- Catalyst: A roughly 2% slump in crude oil sparked long liquidation in sugar futures.
- Why it matters: Oil’s direction influences expectations for ethanol demand and therefore sugar production decisions.
- Supply backdrop: While some disruption and production signals have been supportive, export expectations—especially from India—remain a pressure point.
What drove the move
According to market coverage, sugar prices fell as crude oil weakness weighed on the complex. The selloff was linked to long liquidation—position trimming that typically accelerates when correlated commodities turn lower.
Earlier, sugar had rallied. On Tuesday, New York sugar reached a 5-month high and London sugar pushed to a 5.5-month high after crude prices surged to a 3.75-year high. The rebound in oil had been viewed as bullish for sugar because it tends to lift ethanol economics, potentially encouraging mills to allocate more cane and sugar toward ethanol output rather than sugar.
Support also came from supply-side factors. The closure of the Strait of Hormuz has been cited as constraining refined sugar output, with Covrig Analytics estimating it has curbed about 6% of global sugar trade. The disruption added an extra layer of near-term tightness even as longer-term fundamentals have been debated.
Supply outlook: surplus concerns remain
Despite the recent upswing tied to oil, sugar has faced a lingering overhang from expectations for continued surplus balances. Earlier in the month, prices slid to 5.5-year lows in response to concerns that the global surplus would persist.
Several industry estimates point to excess supply ahead. Czarnikow projected a 3.4 million metric ton surplus in the 2026/27 crop year, after an 8.3 million metric ton surplus in 2025/26. Green Pool Commodity Specialists expected a 2.74 million metric ton surplus for 2025/26 and a 156,000 MT surplus for 2026/27, while StoneX forecast a 2.9 million metric ton surplus for 2025/26.
The International Sugar Organization, in its February 27 forecast, projected a +1.22 million metric ton surplus for 2025/26, following a -3.46 million metric ton deficit in 2024/25. The ISO said the expected surplus is driven by higher production in India, Thailand, and Pakistan, forecasting a year-over-year rise in global sugar output of +3.0% to 181.3 million MT for 2025/26.
Mixed signals from major producers
Not all supply data has been bearish. Signs of lower output in Brazil have supported prices in parts of the market cycle. Unica reported that sugar production in Brazil’s Center-South region in the second half of January fell 36% year over year to just 5,000 MT. However, the same report indicated that cumulative Center-South sugar output through January was still up 0.9% year over year at 40.24 million MT, keeping the broader picture more balanced.
India’s production and biofuel allocation have also been moving. The Indian Sugar and Bio-energy Manufacturers Association said India’s 2025/26 sugar output from Oct. 1 through Mar. 15 rose 10.5% year over year to 26.2 million MT. ISMA also projected India’s 2025/26 production at 29.3 million MT, up 12% year over year, compared with an earlier estimate of 30.95 million MT.
At the same time, ISMA cut its estimate for sugar used for ethanol production in India to 3.4 million MT from a prior July forecast of 5 million MT. That change could shift more sugar toward food and export markets. India is also described as the world’s second-largest sugar producer.
The market has been particularly sensitive to export expectations. The article cited that India’s government approved an additional 500,000 MT of sugar for export for the 2025/26 season, on top of the 1.5 million MT approved in November. India introduced quotas for sugar exports in 2022/23 after late rain reduced production and tightened domestic supplies.
What investors will watch next
With sugar trading tightly to crude and ethanol economics in the near term, investors are likely to focus on whether oil holds its decline or reverses—given that energy-linked liquidation has been a key driver of today’s drop. Beyond the near-term technicals, attention will remain on production and trade flows, particularly updates on Brazil’s Center-South output, India’s export approvals and ethanol demand, and any further disruptions tied to regional shipping constraints.
Traders may also watch future USDA-type supply updates and any revisions from the International Sugar Organization and major producer associations, which have been used by the market to frame expectations for the 2025/26 and 2026/27 balance.
