Weak Crude Oil Prices Drive Down Sugar Market

October NY world sugar #11 (SBV26) is down -0.15 (-1.00%), and Aug London ICE white sugar #5 (SWQ26) is down -0.10 (-0.02%). Sugar prices are declining today as crude oil weakness reduces ethanol costs, prompting millers to prioritize sugar production over ethanol, increasing supply. WTI crude oil (CLQ26) fell to a 4.25-month low, directly impacting ethanol pricing.

Sugar prices rose sharply this week, with NY sugar hitting a 7-week high and London sugar recording a 9.75-month high. Concerns over India’s weak monsoon rains, which could cut sugarcane yields, are driving prices higher. India’s cumulative monsoon rainfall as of July 1 was 38% below normal, with the weather department forecasting the weakest monsoon in 11 years. Thailand and Brazil also face risks from potential El Niño-related rainfall disruptions, which could reduce global harvests.

Brazil’s sugar mills are shifting cane to ethanol production due to rising crude oil prices. USDA data shows Brazil’s 2026/27 sugar production is expected to decline by 0.5% to 43.952 MMT, while ethanol output rises by 7.2%. Similarly, India’s 2025/26 production forecast was revised down to 32 MMT after monsoon failures, though the USDA predicts a surplus of 2.5 MMT later in the season.

Global sugar forecasts are mixed. The International Sugar Organization (ISO) estimates a record 2025/26 production of 182 MMT but anticipates a 2026/27 deficit of 262,000 MT due to El Niño impacts. Meanwhile, StoneX and Covrig Analytics project deficits of -550,000 MT and 100,000 MT, respectively, citing reduced yields in key producing nations.

As crude oil prices remain low, the interplay between energy and agricultural markets will continue to influence sugar supply dynamics. Trading activity reflects uncertainty around weather patterns and production shifts in major exporting countries.

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