Sugar prices ended higher on Monday, supported by a sharp rise in crude oil prices. The surge in West Texas Intermediate (WTI) crude oil, which climbed more than 6% to an 8-month high, is seen as beneficial for ethanol prices. This could encourage sugar producers to divert more cane toward ethanol production instead of sugar, potentially tightening sugar supplies, Barchart reported.
Earlier this month, sugar prices had fallen to their lowest level in more than five years amid expectations of a continued global surplus. Market analysts have recently projected ongoing oversupply in the coming crop years, though their estimates vary. Several industry observers expect global sugar surpluses in both 2025/26 and 2026/27, following a larger surplus in the previous season.
The International Sugar Organization has forecast a modest global surplus for 2025-26, lower than its earlier estimate. It also noted that the surplus is being driven mainly by higher production in India, Thailand, and Pakistan. The organization expects global sugar production to rise in the 2025-26 season.
Signs of weaker output in Brazil have provided some support to prices. Recent data showed a sharp year-on-year drop in production in BrazilтАЩs Center-South region during the second half of January. However, total output for the current season through January remains slightly higher than a year earlier. The share of cane used for sugar production has also increased compared with the previous year.
A consulting firm has projected that BrazilтАЩs sugar production and exports will decline in the 2026/27 season compared with the earlier outlook for 2025/26.
In Indian Sugar and Bio-energy Manufacturers Association data released today showed that IndiaтАЩs sugar output for the current season so far is higher than a year earlier. The association recently revised its full-year production forecast downward from an earlier estimate, but still expects growth compared with last year. It also reduced its estimate for the amount of sugar diverted to ethanol, which may allow greater availability for exports.
The government of India has approved additional sugar exports for the current season, adding to quantities already permitted earlier. India had introduced export limits in a previous season to manage domestic supplies after weather-related disruptions reduced production. India remains one of the worldтАЩs largest sugar producers.
Prospects of higher production in Thailand are also weighing on prices. Industry projections indicate that ThailandтАЩs upcoming crop could rise compared with the previous year. Thailand is among the worldтАЩs leading sugar producers and exporters.
Meanwhile, a recent report from the United States Department of Agriculture projected record global sugar production for the 2025-26 season, along with record consumption. However, it also forecast a decline in global ending stocks compared with the previous year. The agency expects higher production in Brazil, India, and Thailand, supported by favorable weather conditions and expanded planting.
Overall, sugar prices remain influenced by expectations of global supply levels, production trends in major producing countries, export policies, and movements in energy markets, particularly crude oil.
