Sugar Futures Rally on Supply Tightening Concerns

NY March sugar (SBH26) jumped +1.41% today while London ICE white sugar (SWH26) surged +1.31%, hitting 5-week highs. The spike came after StoneX downgraded Brazil's 2026/27 Center-South production forecast to 41.5 MMT (down from 42.1 MMT in September), signaling tighter supplies ahead.

Support is also coming from India, where the food ministry is mulling higher ethanol prices—a move that could redirect more sugarcane toward fuel production, cutting into sugar output. Meanwhile, India's export quota remains capped at 1.5 MMT for 2025/26, well below previous 2 MMT estimates, further constraining global supply.

However, headwinds persist. The International Sugar Organization forecasts a 1.625 MMT surplus for 2025/26 (reversing from a 2.916 MMT deficit in 2024/25), driven by record crops in India, Thailand, and Pakistan. ISO expects global production to climb +3.2% y/y to 181.8 MMT—a sharp contrast from August's deficit outlook.

Brazil remains the wild card: Conab raised its 2025/26 forecast to 45 MMT, while Center-South output through October is already up +1.6% y/y at 38.085 MMT. India's crop is surging too—ISMA now projects 31 MMT (+18.8% y/y), thanks to robust monsoon rains (+8% above normal). The disconnect between near-term supply tightness and medium-term oversupply is keeping traders on edge.