Sugar Prices Slide to Three-Week Lows Amid Crude Oil Collapse

May NY world sugar #11 (SBK26) fell 1.99% to 0.29 points, while May London ICE white sugar #5 (SWK26) dropped 1.49%, or 6.40 points.

Sugar prices extended their week-long sell-off, hitting three-week lows as a 16% collapse in crude oil prices (CLH26) weighed on the market. Weakening crude undercuts ethanol values, which may prompt sugar mills to divert more cane into sugar production rather than ethanol, potentially boosting global sugar supplies.

The slide accelerated after India’s Food Secretary stated on Tuesday that the government has no plans to ban sugar exports this year, easing fears that India would shift more sugar to ethanol production following the Iran war’s disruption of crude oil supplies. Further pressure came on Thursday when India’s National Federation of Cooperative Sugar Factories Ltd. reported that the country’s 2025-26 sugar output from October through March rose 9% year-over-year to 27.12 million metric tons (MMT).

Brazil is also adding to the bearish tone. Unica reported on March 27 that cumulative 2025-26 Center-South sugar output for the period through mid-March climbed 0.7% year-over-year to 40.25 MMT, with mills increasing the share of cane crushed for sugar to 50.61% from 48.08% a year earlier.

Sugar prices had rallied at the start of the week. Last Monday, NY sugar reached a 5.75-month high and London sugar peaked at a 6.25-month high, buoyed by strong crude oil, which had surged to a 3.75-year high the prior month. That rally had raised hopes that mills would boost ethanol output and curb sugar production.

The Strait of Hormuz closure is providing some support, as Covrig Analytics estimates the disruption has curbed roughly 6% of the world’s sugar trade, putting a lid on refined sugar volumes.

Longer-term, sugar remains vulnerable to a global surplus. Prices plunged to 5.5-year nearest-futures lows last month on expectations of persistent oversupply. Czarnikow forecast on February 11 a global sugar surplus of 3.4 MMT in the 2026/27 crop year, following an 8.3 MMT surplus in 2025/26. Green Pool Commodity Specialists projected a 2.74 MMT surplus for 2025/26 and 156,000 MT for 2026/27 on January 29, while StoneX on February 13 expected a 2.9 MMT surplus in 2025/26.

The International Sugar Organization (ISO) forecast on February 27 a 1.22 MMT surplus in 2025-26, replacing a 3.46 MMT deficit in 2024-25, driven by rising output from India, Thailand, and Pakistan. ISO also projected global sugar production would grow 3.0% year-over-year to 181.3 MMT.

India’s domestic outlook shapes the market further. The Indian Sugar and Bio-energy Manufacturers Association (ISMA) on March 11 cut its 2025/26 production estimate to 29.3 MMT, up 12% year-over-year but below an earlier 30.95 MMT projection. ISMA also reduced its sugar crush for ethanol to 3.4 MMT from a prior 5 MMT forecast, potentially freeing more sugar for export. India, the world’s second-largest producer, approved an additional 500,000 MT of exports on February 13, adding to the 1.5 MMT authorized in November, as it uses a quota system introduced after rain-damaged output in 2022/23.

The USDA’s semiannual report, released December 16, predicted global 2025/26 sugar production would rise 4.6% year-over-year to a record 189.318 MMT, while consumption would increase 1.4% to a record 177.921 MMT. Ending stocks are forecast to decline 2.9% to 41.188 MMT. The USDA’s Foreign Agricultural Service (FAS) projects Brazil’s 2025/26 production will climb 2.3% to a record 44.7 MMT, India’s will jump 25% to 35.25 MMT on favorable monsoons and expanded acreage, and Thailand’s will rise 2% to 10.25 MMT.

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