Sugar's Roller Coaster: Supply Glut vs. Policy Swings

Sugar futures caught between bullish and bearish signals this week. March NY #11 ticked up +0.14%, while London white sugar #5 gained +0.35%—but don’t let the green numbers fool you.

The real story? A global supply avalanche is crushing prices. Brazil’s crushing it (literally)—production hit 45 MMT forecasted for 2025/26, up from 44.5 MMT. Meanwhile, India’s bouncing back hard: the Indian Sugar Mill Association just bumped their 2025/26 output forecast to 31 MMT (+18.8% YoY), after monsoon rains delivered 8% above-normal rainfall.

Here’s where it gets spicy: India’s food ministry floated the idea of jacking up ethanol prices to encourage mills to divert more cane toward fuel production instead of sugar. That would tighten supplies… except crude oil prices just tanked over -2%, making ethanol less attractive. The mills are likely to crush for sugar instead—flooding the market again.

The numbers don’t lie. Global 2025/26 sugar production is headed for 181.8 MMT (+3.2% YoY), while consumption only climbs +1.4% to 177.921 MMT. That’s a 1.625 MMT surplus according to the International Sugar Organization (ISO)—a massive flip from the 2.916 MMT deficit last year.

Worse? Czarnikow upgraded their surplus forecast to 8.7 MMT for 2025/26. Sugar’s already posted 4.75-year lows in London and 5-year lows in NY over recent weeks. With India, Brazil, and Thailand all ramping up production, the pressure isn’t easing anytime soon.