May NY world sugar #11 (SBK26) on Thursday closed down -0.10 (-0.68%), and Aug London ICE white sugar #5 (SWQ26) closed down -5.90 (-1.33%).
Sugar prices gave up an early advance on Thursday and settled lower after the USDA said it expects a 2026/27 sugar surplus in India of 2.5 MMT, the first surplus in two years. India is the world’s second-largest sugar producer.
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Sugar prices initially moved higher on Thursday, with NY sugar posting a 3-week high and London sugar posting a 4-week high. Strength in gasoline prices is supportive for sugar, as gasoline (RBM26) surged to a 3.75-year high on Thursday, boosting ethanol prices and potentially persuading the world’s sugar mills to divert more cane crushing toward ethanol production rather than sugar, thus curbing sugar supplies.
The action by Brazil’s sugar mills to boost ethanol production at the expense of sugar is supportive for sugar prices. Unica today reported that 2026/27 Brazil Center-South sugar production in the first half of April fell -11.9% y/y to 647 MT, with mills cutting the amount of cane crushed for sugar production to 32.9% from 44.7% last year. On Tuesday, Conab, in its initial report for the new sugar season, reported that 2026/27 Brazil sugar output will decline by -0.5% to 43,952 MT, while ethanol output will climb by +7.2% y/y to 29,259 million liters.
Sugar prices have been under pressure for the past four weeks, with NY sugar falling to a 5.5-year low in the nearest futures contract on April 17 amid expectations of abundant global supplies and tepid demand. The April 15 expiration of the May London sugar contract saw 472,650 MT of deliveries to settle the contract, the most for a May contract in 14 years, a sign of tepid sugar demand.
Sugar prices also took a hit earlier this month when India’s Food Secretary said the government has no plans to ban sugar exports this year, easing concerns that it could divert more sugar to make ethanol following the Iran war disruption to crude oil supplies. On February 13, India’s government approved an additional 500,000 MT of sugar for export for the 2025/26 season, on top of the 1.5 MMT approved in November. India introduced a quota system for sugar exports in 2022/23 after late rain reduced production and limited domestic supplies.
The outlook for smaller Brazilian sugar output is supportive of prices. Last Tuesday, the USDA forecast Brazil’s 2026/27 sugar production at 42.5 MMT, down -3% y/y, citing millers crushing more cane for ethanol than for sugar.
Signs of a smaller global sugar surplus are also supportive for prices. Last Tuesday, Covrig Analytics cut its 2026/27 global sugar surplus estimate to 800,000 MT from 1.4 MMT previously. Last Monday, sugar trader Czarnikow cut its 2026/27 global sugar surplus estimate to 1.1 MMT from 3.4 MMT in February, and cut its 2025/26 surplus estimate to 5.8 MT from 8.3 MMT.
Sugar prices also have some support amid concerns over supply disruptions from the ongoing closure of the Strait of Hormuz. According to Covrig Analytics, the closure of the strait has curbed approximately 6% of the world’s sugar trade, constraining refined sugar output.
On April 16, India’s National Federation of Cooperative Sugar Factories Ltd. reported that India’s 2025-26 sugar production from Oct 1-Apr 15 was up +7.7% y/y to 27.48 MMT. On March 11, the Indian Sugar and Bio-energy Manufacturers Association (ISMA) projected India’s 2025/26 sugar production at 29.3 MMT, up 12% y/y, below an earlier projection of 30.95 MMT. The ISMA also cut its estimate for sugar used for ethanol production in India to 3.4 MMT from a July forecast of 5 MMT, which may allow India to boost its sugar exports.
The International Sugar Organization (ISO) on February 27 forecasted a +1.22 MMT (million metric ton) sugar surplus in 2025-26, following a -3.46 MMT deficit in 2024-25. ISO said the surplus is being driven by increased sugar production in India, Thailand, and Pakistan. ISO is forecasting a +3.0% y/y rise in global sugar production to 181.3 million MMT in 2025-26.
The USDA, in its bi-annual report released on December 16, projected that global 2025/26 sugar production would climb +4.6% y/y to a record 189.318 MMT and that global 2025/26 human sugar consumption would increase +1.4% y/y to a record 177.921 MMT. The USDA also forecast that 2025/26 global sugar ending stocks would fall by -2.9% y/y to 41.188 MMT. The USDA’s Foreign Agricultural Service (FAS) predicted that Brazil’s 2025/26 sugar production would rise by 2.3% y/y to a record 44.7 MMT. FAS also predicted that India’s 2025/26 sugar production would increase by 25% y/y to 35.25 MMT, driven by favorable monsoon rains and increased sugar acreage. In addition, FAS predicted that Thailand’s 2025/26 sugar production will increase by +2% y/y to 10.25 MMT.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
