Sugar Prices Surge on Oil Rally, But Global Surplus Looms: Insight & Outlook

The global sugar market is witnessing a fascinating tug-of-war between bullish short-term triggers and looming longer-term headwinds. In recent trading sessions, global sugar prices have climbed sharply, powered primarily by a significant surge in crude oil—now at 2.5-year highs after leaping over 12%. This rise in oil prices has made ethanol production more attractive, incentivizing sugar mills to channel more sugarcane into energy markets and tightening near-term sugar supply. This short-run support for prices is reinforced by recent futures market moves: both New York raw (#11) and London white (#5) sugar contracts have posted robust gains.

However, the sugar market’s landscape is far from uniformly bullish. Despite these price advances, most major analysts foresee a persistent global sugar surplus in upcoming seasons, with growing output from top producers like India, Thailand, and Pakistan expected to tip the scales. Production projections from leading industry consultancies and agencies consistently point to multi-million-tonne surpluses, while the International Sugar Organization (ISO) has even scaled back its own surplus forecast, yet still expects the market to remain well supplied. Regional dynamics also play a pivotal role. Lower output in Brazil’s Center-South recently propped up prices, but longer-term estimates still see robust Brazilian output. Meanwhile, India and Thailand are both poised for increased production alongside greater export availability, further feeding global inventories.

In summary, while elevated oil prices are propelling a short-term rally and supporting a more optimistic sentiment among market participants, the anticipation of large-scale global surpluses over the next two years is a significant check on any sustained bullish move for sugar. The market thus stands at a crossroads, balancing supply risk with optimism, and requires keen monitoring by all participants.

📈 Prices

Exchange/Product	Type	Country	Latest Price	Weekly Change	Sentiment
ICE NY #11	Raw Sugar Futures (May)	US	+2.77%	▲ Rising	Bullish short-term
ICE London #5	White Sugar Futures (May)	UK/EU	+1.97%	▲ Rising	Bullish short-term
Sugar Granulated	ICUMSA 32, 0,300–0,600 mm	GB	0.43 EUR/kg	+0.01 EUR/kg	Bullish
Sugar Granulated	ICUMSA 45, 0,212–0,425 mm	GB	0.43 EUR/kg	+0.01 EUR/kg	Bullish
Sugar Granulated	ICUMSA 45, 0,4–1,0 mm	UA/CZ	0.42 EUR/kg	+0.01 EUR/kg	Bullish

🌍 Supply & Demand

• Short-term: Rising crude oil supports sugar prices due to increased ethanol production incentives.
• Medium/Long-term: Large global surpluses expected (forecasts range 1.22–3.4 million tonnes).
• 2025-26 global sugar output: +3% y/y to ~181.3 million tonnes (India, Thailand, Pakistan).
• Brazil’s Center-South Jan output: −36% y/y, but annual pace remains steady at +40.24 million tonnes.
• India: Sugar output Oct–Feb 24.75 million tonnes, +12% y/y; 2025-26 full season 29.3 million tonnes expected. Reduced sugar diversion to ethanol may boost export availability.
• Thailand: 2025-26 output set to rise 5% to 10.5 million tonnes.

📊 Fundamentals

• USDA 2025-26: Global production could set record at 189.3 million tonnes. Consumption up 1.4% to 177.9 million tonnes.
• Global ending stocks forecast to dip slightly to 41.2 million tonnes.
• Exports: India approved additional 500,000 tonnes of exports (total 2.0 million tonnes).
• Brazil’s 2026-27 output projected to dip 3.9% (41.8m t), exports to fall 11% (30m t).

🌦️ Weather Outlook

• Brazil: Recent dryness affected Center-South, causing a sharp short-term output drop; monitor for rain recovery or losses ahead of main crush.
• India & Thailand: Growing conditions currently favorable; no major threats reported. Close monitoring needed as the monsoon season develops for India.

🌏 Global Production & Stocks

Country	2025-26 Production (mt)	Surplus/Change
Brazil	40.24	Stable YoY (annual pace)
India	29.3	+12% Oct-Feb YoY
Thailand	10.5	+5%
Global	181.3–189.3	+3% YoY
Global Ending Stocks	41.2	Slight dip YOY

🧭 Trading Outlook & Recommendations

• Short-term: Price supported by oil rally and Brazilian output hiccup; expect continued strength if oil remains elevated.
• Medium-term: Surplus expectations from India, Thailand, and record global production likely to cap rallies; watch for export policy shifts.
• Key Watch Factors:
  • Further movements in global oil prices
  • Indian/Thai growing season weather
  • Brazilian harvest updates
• Strategy: Producers: Consider forward sales on rallies; End-users: secure nearby needs but retain flexibility for potential price dips later in 2026.

📆 3-Day Regional Price Forecast

Exchange/Product	Current (EUR/kg)	Forecast
ICE NY #11	N/A	Steady/firm with oil volatility; possible short-term gains if oil rises further.
Sugar Granulated (GB, ICUMSA 32)	0.43	Stable/slightly higher, tracking futures strength short term.
Sugar Granulated (UA/CZ, ICUMSA 45)	0.42	Stable; moderate regional demand/ample supply balances price.
Sugar Granulated (DE, ICUMSA 45)	0.50	Stable/high; remains at upper end of range on regional supply tightness.