Global sugar prices moved higher on Monday after oil prices jumped following Israeli air strikes on about 30 oil depots in Iran. The increase in crude prices on Monday improved ethanol returns, prompting sugar mills in many countries to divert more sugarcane toward ethanol production instead of sugar, which could tighten sugar supplies in the market, Barchart reported.
However, on Tuesday, crude prices were reported lower in the morning, and this is expected to affect sugar prices.
Earlier this year, sugar prices had dropped sharply. On February 12, prices fell to their lowest level in more than five years amid concerns about a global surplus. Analysts from Czarnikow said on February 11 that the world could see a surplus of 3.4 million metric tonnes (MMT) in the 2026–27 season, following a surplus of 8.3 MMT in 2025–26.
Other market forecasts have also indicated excess supply. Green Pool Commodity Specialists estimated a surplus of 2.74 MMT for 2025–26 and a smaller surplus of 156,000 tonnes for 2026–27, while StoneX projected a surplus of 2.9 MMT in 2025–26.
The International Sugar Organization said on February 27 that the global market could record a surplus of 1.22 MMT in 2025–26, after a deficit of 3.46 MMT in the previous season. The organization attributed the expected surplus to higher production in India, Thailand, and Pakistan. It also expects global sugar production to rise by about 3% year-on-year to 181.3 MMT in 2025–26.
However, lower production in Brazil has provided some support to prices. According to Unica, sugar production in Brazil’s Centre-South region during the second half of January fell by 36% compared with the same period last year, reaching just 5,000 tonnes. Despite this decline, total sugar output in the region for the 2025–26 season through January rose slightly by 0.9% to 40.24 MMT.
In India, the Indian Sugar and Bio-energy Manufacturers Association said on March 6 that sugar production during October 1 to February 28 in the 2025–26 season increased by 12% from a year earlier to 24.75 MMT. The association has estimated total production for the season at 29.3 MMT, which is 12% higher than last year but lower than its earlier forecast of 30.95 MMT.
The association also reduced its estimate of sugar used for ethanol production to 3.4 MMT, down from the earlier projection of 5 MMT. This could allow India, the world’s second-largest sugar producer, to increase its sugar exports.
Meanwhile, the Indian government has already approved additional exports. On February 13, authorities allowed another 500,000 tonnes of sugar to be exported in the 2025–26 season, in addition to the 1.5 MMT export quota announced earlier in November. India had introduced export limits in the 2022–23 season after lower production affected domestic supplies.
According to the latest biannual report from the United States Department of Agriculture, global sugar production in 2025–26 is expected to rise by 4.6% from a year earlier to a record 189.3 MMT. Global sugar consumption is also projected to grow by 1.4% to a record 177.9 MMT. However, global ending stocks are expected to decline by 2.9% to 41.19 MMT.
The Foreign Agricultural Service of the USDA estimates that Brazil’s sugar production in 2025–26 could rise by 2.3% to a record 44.7 MMT. It also expects sugar production in India to increase by 25% to 35.25 MMT due to favourable monsoon rains and expanded cultivation. In Thailand, production is forecast to rise by 2% to 10.25 MMT.
