Sugar Prices Settle Higher as Crude Oil Surges
**Sugar Prices Rise on Thursday Amid Crude Oil Rally and Supply Concerns**
March NY world sugar #11 (SBH26) closed up +0.19 (+1.26%) on Thursday, while December London ICE white sugar #5 (SWZ25) finished higher by +3.30 (+0.76%). The uptick in sugar prices followed a sharp rally in crude oil prices, which sparked short-covering in sugar futures.
Crude oil (CLZ25) surged more than 5% on Thursday to a two-week high. This rise benefits ethanol prices and could encourage sugar mills worldwide to shift more cane crushing towards ethanol production rather than sugar, thus curbing sugar supplies.
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### Sugar Prices Under Pressure Amid Robust Supply Outlook
Sugar prices have been under pressure over the past seven months. NY sugar recently slid to a new 4.5-year nearest-futures low on Wednesday, while London sugar posted a 4.25-year low on Tuesday. These declines are mainly due to signs of higher sugar output in Brazil.
Last Thursday, Unica reported that Brazil’s Center-South sugar output in the second half of September rose by 10.8% year-over-year (y/y) to 3.137 million tonnes (MT). Additionally, the percentage of sugarcane crushed for sugar production increased to 51.17% from 47.73% year-over-year.
Cumulative 2025-26 Center-South sugar output through September also rose modestly by 0.8% y/y to 33.524 million metric tonnes (MMT).
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### Global Supply Projections Weigh on Prices
The outlook for robust global sugar supplies continues to pressure prices. Consultant Datagro projected on Tuesday that Brazil’s Center-South 2026/27 sugar production will climb 3.9% y/y to a record 44 MMT.
Similarly, BMI Group forecasted a global 2025/26 sugar surplus of 10.5 MMT, while Covrig Analytics projected a surplus of 4.1 MMT for the same season.
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### India’s Bumper Crop Outlook Adds to Bearish Sentiment
Higher sugar exports expected from India also contribute to the negative price outlook. Abundant monsoon rains may lead to a bumper sugar crop, with the India Meteorological Department reporting cumulative monsoon rainfall at 937.2 mm as of September 30, 8% above normal and marking the strongest monsoon in five years.
India’s National Federation of Cooperative Sugar Factories projected on June 2 that the country’s 2025/26 sugar production would increase 19% y/y to 34.9 MMT, following a 17.5% decline to a five-year low of 26.2 MMT in 2024/25, according to the Indian Sugar Mills Association (ISMA).
However, sugar trader Sucden recently noted that India may divert 4 MMT of sugar to ethanol production in 2025/26. While this diversion is significant, it is unlikely to ease India’s sugar surplus substantially and may prompt mills to export as much as 4 MMT, doubling earlier expectations of 2 MMT. India remains the world’s second-largest sugar producer.
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### Thailand’s Growing Crop Adds Further Pressure
The outlook for higher sugar production in Thailand also weighs on prices. The Thai Sugar Millers Corp. projected on October 1 that Thailand’s 2025/26 sugar crop will increase 5% y/y to 10.5 MMT.
Thailand’s Office of the Cane and Sugar Board reported on May 2 that the 2024/25 sugar production rose by 14% y/y to 10.00 MMT. Thailand ranks as the world’s third-largest sugar producer and second-largest exporter.
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### Global Sugar Outlook: Deficits Narrowing Amid Rising Production
On August 29, the International Sugar Organization (ISO) forecasted a global sugar deficit for the 2025/26 season—the sixth consecutive year of deficits. However, the projected deficit of just 231,000 MT is significantly narrower than the 4.88 MMT shortfall in 2024/25.
ISO projects global sugar production to rise 3.3% y/y to 180.6 MMT in 2025/26, while consumption is expected to increase slightly by 0.3% y/y to 180.8 MMT.
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### USDA Forecasts Record Global Production and Consumption
The USDA’s bi-annual report released on May 22 projects global 2025/26 sugar production climbing 4.7% y/y to a record 189.318 MMT. Human sugar consumption is also forecasted to reach a record high of 177.921 MMT, up 1.4% y/y.
Global sugar ending stocks are expected to rise 7.5% y/y to 41.188 MMT.
The USDA’s Foreign Agricultural Service (FAS) predicts Brazil’s 2025/26 sugar production will increase 2.3% y/y to a record 44.7 MMT. India’s production is forecasted to rise 25% y/y to 35.3 MMT, driven by favorable monsoon rains and increased sugar acreage. Thailand’s sugar production is expected to increase 2% y/y to 10.3 MMT.
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### Disclaimer
On the date of publication, Rich Asplund did not hold positions (directly or indirectly) in any securities mentioned. All information and data are for informational purposes only. For further details, please refer to the [Barchart Disclosure Policy](https://www.barchart.com/disclosure).
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**More from Barchart:**
– As the Harvest Reaches a Halfway Point, Corn Is Heading Into a ‘Buy’ Zone
– Sugar Looks Sickly, Not Sweet. How Much Lower Can Prices Go?
– Soft Commodities in Q3: What Are the Prospects for Q4 and Beyond?
– Is the Global Soybean Balance Sheet Tight?
*The views expressed are those of the author and do not necessarily reflect those of Nasdaq, Inc.*
https://www.nasdaq.com/articles/sugar-prices-settle-higher-crude-oil-surges
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