Weakness in Crude Oil Weighs on Sugar Prices

July NY world sugar #11 (SBN26) fell 0.02 points (-0.15%) to close at 11, while August London ICE white sugar #5 (SWQ26) slipped 2.20 points (-0.49%) to 452.

Sugar prices were under pressure on Monday, with NY sugar reaching a 1.75‑month low and London sugar a 2.5‑week low. A 5% decline in WTI crude oil reduced ethanol margins, prompting sugar mills to shift more cane toward sugar production, which could increase supply.

India’s Meteorological Department reported that cumulative monsoon rainfall was 26% below the long‑term average as of June 12, the start of the June‑September monsoon season.

Concerns about dry conditions linked to an emerging El Niño are bullish for sugar prices. Japan’s Meteorological Agency confirmed the El Niño pattern across the equatorial Pacific, which is expected to reduce rainfall in Brazil, India and Thailand – the three largest sugar‑producing regions. India’s weather office lowered its June‑September rainfall outlook to 90% of normal, down from 92% in April. The NOAA estimates a 67% chance of a “Super El Niño,” the strongest on record.

Trader Czarnikow revised its 2026/27 global sugar balance from a 1.4 MMT surplus to a 100,000 MT deficit, noting that higher crude oil prices have driven Brazilian mills to crush more cane for ethanol than for sugar.

Conab’s initial report for the 2026/27 season projects Brazilian sugar output to fall 0.5% to 43.952 MMT, while ethanol production is expected to rise 7.2% year‑over‑year to 29.259 million liters.

The USDA forecast Brazil’s 2026/27 sugar production at 42.5 MMT, a 3% decline, attributing the drop to increased cane crushing for ethanol.

ISMA revised its 2025/26 sugar production forecast to 32 MMT, down from 32.4 MMT, and projects 800,000 MT of sugar exports for the same period. The country introduced an export quota system in 2022/23 after reduced production limited domestic supplies.

The USDA expects a 2.5 MMT sugar surplus in India for 2026/27, the first surplus in two years, as the second‑largest sugar producer.

The International Sugar Organization (ISO) projected a record global sugar crop for 2025/26 at 182 MMT, a 3.5% increase year‑over‑year, and raised its surplus estimate to 2.2 MMT.

For 2026/27, ISO anticipates a 1.15% decline in global sugar production to 180 MMT and a deficit of 262,000 MT, citing potential El Niño impacts on harvests in India and Thailand.

StoneX forecasts a 550,000 MT deficit for 2026/27, while Covrig Analytics reduced its surplus outlook to 100,000 MT.

The USDA’s bi‑annual report estimates 2025/26 global sugar production at a record 189.318 MMT, up 4.6% year‑over‑year, and human consumption at 177.921 MMT, up 1.4%. Global ending stocks are projected to fall 2.9% to 41.188 MMT. The Foreign Agricultural Service (FAS) predicts a record 44.7 MMT of sugar in Brazil for 2025/26, a 25% increase in India to 35.25 MMT driven by favorable monsoons and higher acreage, and a 2% rise in Thailand to 10.25 MMT.

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