Sugar Prices Slide Amid Dollar Strength and Production Glut
Market Close Data On Monday, May NY world sugar #11 (SBK26) closed down -0.21 (-1.33%), while May London ICE white sugar #5 (SWK26) closed down -6.30 (-1.37%). Sugar prices surrendered an early advance after the dollar index ($DXY) rallied to a 10.5-month high, triggering long liquidation in sugar futures.
Supply and Macro Drivers
While crude oil prices (CLK26) initially boosted sugar prices by more than +3% on Monday—potentially encouraging mills to shift toward ethanol production—the broader trend remained negative. Prices faced pressure from negative carryover following Friday's data, which highlighted higher sugar production in Brazil.
According to Unica, cumulative 2025-26 Center-South sugar output (October through mid-March) rose +0.7% year-over-year to 40.25 MMT. Sugar mills increased the portion of cane crushed for sugar to 50.61%, up from 48.08% last year.
Additionally, supply disruptions from the closure of the Strait of Hormuz have impacted trade. Covrig Analytics estimates the closure has curbed approximately 6% of the world's sugar trade, constraining refined sugar output.
Global Surplus Forecasts
Earlier this month, prices hit 5.5-year nearest-futures lows due to concerns over a persistent global surplus. Analysts have issued varying but consistent forecasts regarding excess supply:
- Czarnikow (Feb 11): Expects a global sugar surplus of 3.4 MMT in the 2026/27 crop year, following an 8.3 MMT surplus in 2025/26.
- Green Pool Commodity Specialists (Jan 29): Forecasts a 2.74 MMT global sugar surplus for 2025/26 and a 156,000 MT surplus for 2026/27.
- StoneX (Feb 13): Projects a global sugar surplus of 2.9 MMT in 2025/26.
- International Sugar Organization (ISO) (Feb 27): Forecasted a +1.22 MMT sugar surplus in 2025-26, following a -3.46 MMT deficit in 2024-25. ISO predicts global production will rise +3.0% y/y to 181.3 million MMT in 2025-26.
Context: Production Shifts in Key Nations
The surplus is largely driven by increased sugar production in India, Thailand, and Pakistan. The Indian Sugar and Bio-energy Manufacturers Association (ISMA) reported that India's 2025-26 sugar output from Oct 1-Mar 15 was up +10.5% y/y to 26.2 MMT.
On March 11, ISMA projected India's total 2025/26 production at 29.3 MMT (up 12% y/y), though this is below an earlier projection of 30.95 MMT. The association also cut its estimate for sugar used for ethanol production in India to 3.4 MMT from a July forecast of 5 MMT, potentially allowing for higher exports.
On February 13, the Indian government approved an additional 500,000 MT of sugar for export for the 2025/26 season, adding to the 1.5 MMT approved in November. India introduced a quota system for sugar exports in 2022/23 after late rain reduced production.
USDA Outlook
The USDA's bi-annual report released on December 16 projected global 2025/26 sugar production would climb +4.6% y/y to a record 189.318 MMT, while human consumption would increase +1.4% y/y to 177.921 MMT. The USDA forecast that 2025/26 global sugar ending stocks would fall by -2.9% y/y to 41.188 MMT.
The Foreign Agricultural Service (FAS) predicted Brazil's 2025/26 production would rise by 2.3% y/y to a record 44.7 MMT. FAS also forecast India's production would increase by 25% y/y to 35.25 MMT, driven by favorable monsoon rains and increased acreage. Thailand's 2025/26 sugar production is predicted to increase by +2% y/y to 10.25 MMT.
Takeaway
Despite short-term volatility from crude oil strength and geopolitical supply constraints in the Strait of Hormuz, fundamental pressure remains on sugar prices due to robust production forecasts across Brazil, India, and Thailand. The consensus among major analysts points toward continued global surpluses through at least the 2026/27 crop year.
Original source
Dollar Strength Undercuts Sugar Prices
Published: Mar 30, 2026
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