Sugar Prices Slightly Higher as India May Boost Ethanol Prices

Core Viewpoint - Sugar prices have experienced volatility due to various factors, including government policies in India, global production forecasts, and fluctuations in crude oil prices, leading to a complex outlook for the sugar market. Group 1: Price Movements - March NY world sugar 11 is up +0.02 (+0.14%) and March London ICE white sugar 5 is up +1.00 (+0.35%) [1] - Sugar prices reached 3.5-week highs due to India's food ministry considering an increase in ethanol prices, which may lead to reduced sugar supplies as mills divert cane to ethanol production [1] - However, sugar prices retracted most of their gains after WTI crude oil prices fell more than -2%, potentially encouraging mills to focus more on sugar production [2] Group 2: Production Forecasts - The International Sugar Organization (ISO) forecasts a sugar surplus of 1.625 million MT for 2025-26, reversing a previous deficit of 2.916 million MT for 2024-25, driven by increased production in India, Thailand, and Pakistan [3] - ISO also predicts a +3.2% year-on-year increase in global sugar production to 181.8 million MT for 2025-26 [3] - Brazil's crop forecasting agency, Conab, raised its sugar production estimate for Brazil in 2025-26 to 45 million MT, up from 44.5 million MT [6] Group 3: Export Policies - India's food ministry announced it will allow mills to export 1.5 million MT of sugar in the 2025/26 season, lower than earlier estimates of 2 million MT, due to a quota system introduced after reduced production [4] Group 4: Market Sentiment - The outlook for robust global sugar supplies has negatively impacted sugar prices, with London sugar reaching a new 4.75-year low and NY sugar prices hitting a 5-year low due to increased output in Brazil and expectations of a global surplus [5] - Sugar trader Czarnikow increased its global 2025/26 sugar surplus estimate to 8.7 million MT, up +1.2 million MT from a previous estimate [5]