Global Sugar Rally: Brazil Cut, India Boost, But Surplus Looms

Sugar futures just hit 5-week highs—NY March contract up 1.41% and London white sugar up 1.31%. StoneX trimmed its Brazil 2026/27 production forecast to 41.5 MMT (from 42.1 MMT), but that’s not the full story.

The bullish fuel: India’s ethanol pivot. The food ministry is weighing higher ethanol prices for fuel blending, which could pull more sugarcane away from sugar mills. Plus, India capped exports at 1.5 MMT for 2025/26 (down from 2 MMT), tightening the global supply.

The bearish elephant: ISO forecasts a 1.625 MMT surplus in 2025-26 after flipping from a 2.916 MMT deficit in 2024-25. The culprit? Record output from Brazil (+2.3% y/y to 44.7 MMT), India (+25% y/y to 35.3 MMT), and Thailand (+2% to 10.3 MMT). Global production is set to hit 189.3 MMT—a new record.

The chart: Brazil’s Center-South output through October already sits at 38.085 MMT (+1.6% y/y), with mills crushing more cane for sugar (46.02% vs 45.91% last year). India’s monsoon rainfall is 8% above normal—a 5-year high—fueling expectations of a 31-34.9 MMT crop.

Bottom line: Today’s rally is a relief bounce, but the structural backdrop is drowning in supply. The International Sugar Organization had forecast a 231k MT deficit just last August—now they’re looking at a 1.625 MMT surplus. That’s the real tension. Traders are caught between near-term export tightness (India’s quota) and medium-term oversupply.