Sugar prices surged to 5-week highs this week—NY March contract up 1.54%, London up 1.33%. The culprit? StoneX just slashed Brazil's 2026/27 output forecast to 41.5 MMT from 42.1 MMT, and India might be diverting more sugarcane to ethanol production instead of sugar.

But here's the plot twist: the International Sugar Organization is calling a 1.625 million MT surplus for 2025-26, after predicting a deficit earlier this year. Global production is expected to hit a record 181.8 MMT, with India, Thailand, and Pakistan all ramping up output. India alone just bumped its production estimate to 31 MMT (+18.8% YoY), and Thailand's targeting 10.5 MMT.

So we've got a classic supply-demand tug-of-war—tighter Brazil output supporting prices near-term, but massive global capacity coming online could cap the rally. Traders are watching whether India floods exports or shifts more cane to ethanol. The USDA is forecasting record global supplies at 189.3 MMT, so don't expect sugar to run away too far.