Sugar prices continued to decline on Monday, tracking a sharp fall in crude oil rates and rising concerns over a global supply surplus, Barchart reported.
Benchmark WTI crude oil dropped more than 3 per cent during the day, making ethanol less attractive and encouraging mills across the world to use more sugarcane for sugar production instead of fuel. This shift is expected to increase the availability of sugar in the market.
The fall in prices comes after a steep decline earlier this month, when sugar touched its lowest level in more than five years amid expectations of excess global supply. Several market estimates have pointed to a surplus in the coming seasons. Analysts from Czarnikow have projected a surplus of 3.4 million tonnes in 2026-27, following an estimated 8.3 million tonnes surplus in 2025-26. Other firms such as Green Pool and StoneX have also indicated similar trends of higher supply.
The International Sugar Organization has also forecast a surplus of 1.22 million tonnes in 2025-26, compared to a shortfall in the previous year. The increase is mainly due to higher production in India, Thailand and Pakistan. Overall, global sugar production is expected to rise by around 3 per cent to 181.3 million tonnes.
There are, however, some signs supporting prices. In Brazil, sugar output in the Centre-South region fell sharply in the second half of January, according to Unica. Despite this, total production for the season remains slightly higher than last year.
In India, sugar output has shown steady growth. The Indian Sugar and Bio-energy Manufacturers Association reported a 12 per cent increase in production between October and February. It has, however, slightly lowered its full-season estimate and reduced the expected use of sugar for ethanol. This could leave more sugar available for exports.
The possibility of higher exports from India is also weighing on prices. The government has already approved an additional 500,000 tonnes of sugar exports for the current season, on top of earlier permissions.
Meanwhile, the United States Department of Agriculture has projected record global sugar production of 189.3 million tonnes in 2025-26, growing faster than consumption. While global stock levels are expected to decline slightly, higher output from major producing countries is likely to keep prices under pressure in the near term.
Market participants said the combined effect of weak crude oil prices, rising production and export availability is continuing to push sugar prices lower.
