Sugar Rally Hits Speed Bump: Here's What You Need to Know

Sugar futures caught a bid today but couldn't hold the gains. NY March sugar (SBH26) up just +0.14%, while London ICE white sugar (SWH26) gained +0.35% to fresh 3.5-week highs.

The initial push came from India's food ministry mulling higher ethanol prices—a move that could redirect sugarcane toward fuel production instead of crushing for sugar, tightening supplies. But then crude oil tanked over 2%, and that killed the momentum. Lower oil prices make ethanol less attractive, so mills will likely stick with sugar production, flooding markets with more supply.

Here's the bigger picture: global sugar is drowning in oversupply. The International Sugar Organization just flipped its forecast—expecting a 1.625 MMT surplus in 2025-26 after projecting a deficit back in August. The culprit? India, Thailand, and Pakistan are ramping up production hard.

Brazil's crushing it too (literally). The world's largest producer is on track for 45 MMT output in 2025-26, with Center-South sugar up +16.4% YoY in late October. India's also bouncing back with an estimated 31 MMT crop (+18.8% YoY), reversing last year's 5-year low.

Bottom line: record harvests + weakening crude = headwind for prices. The market's pricing in a glut, and unless something changes, don't expect a sugar rush anytime soon.