Sugar prices edged higher on Tuesday, supported by a sharp rise in crude oil. West Texas Intermediate crude climbed more than 4% to its highest level in about eight and a half months. The increase in oil prices is expected to support ethanol values, which could encourage major sugar-producing countries to shift more cane toward ethanol production instead of sugar. Such a move may tighten sugar supplies. However, gains in sugar were limited as the U.S. dollar rose to a three-and-a-quarter-month high, making commodities priced in dollars more expensive for buyers, Barchart reported.
Sugar had recently fallen to its lowest level in nearly 5.25 years on February 12 amid expectations that a global surplus would continue. Earlier this year, several market analysts projected large global surpluses for the current and upcoming crop years. Czarnikow estimated a surplus of 3.4 million metric tons for 2026/27, following an 8.3 million metric ton surplus in 2025/26. Green Pool Commodity Specialists forecast a surplus of 2.74 million metric tons for 2025/26 and 156,000 metric tons for 2026/27. StoneX projected a 2.9 million metric ton surplus for 2025/26.
Last Friday, the International Sugar Organization lowered its forecast for the 2025-26 surplus to 1.22 million metric tons, down from an earlier estimate of 1.63 million metric tons. This follows a deficit of 3.46 million metric tons in 2024-25. The organization said the expected surplus is mainly due to higher production in India, Thailand, and Pakistan. It also projected global sugar production to rise 3% year-on-year to 181.3 million metric tons in 2025-26.
In Brazil, signs of lower production have supported prices. Data showed that sugar output in Brazil’s Center-South region during the second half of January fell 36% from a year earlier. However, total production for the 2025-26 season through January is slightly higher, up 0.9% year-on-year. The share of cane crushed for sugar has also increased compared to last season.
A consulting firm has forecast that Brazil’s sugar production in 2026/27 may decline by nearly 4% from the previous year. It also expects Brazil’s sugar exports to fall by 11% in 2026/27.
In India, the country’s sugar output for the period from October 1 to February 28 rose 12% year-on-year. The industry association has projected total production for 2025-26 at 29.3 million metric tons, which is higher than last year but below an earlier estimate. It also reduced its estimate of sugar diverted to ethanol production, a change that could allow for increased exports. India is the world’s second-largest sugar producer.
Market sentiment has also been affected by expectations of higher Indian exports. The government recently approved an additional 500,000 metric tons of sugar for export for the current season, adding to the earlier approved quota. India introduced export limits in 2022-23 after poor weather reduced output and tightened domestic supplies.
In Thailand, higher production forecasts are also weighing on prices. Industry estimates suggest the country’s 2025-26 crop could rise by about 5% from the previous year. Thailand is one of the world’s largest sugar producers and exporters.
Meanwhile, the U.S. Department of Agriculture has projected that global sugar production in 2025-26 will rise to a record level, increasing by 4.6% from the previous year. It expects global consumption to reach a record high as well, though ending stocks are forecast to decline slightly. The agency’s international arm also predicted record production in Brazil and strong growth in India and Thailand for the 2025-26 season.
