Sugar Prices Undercut by Weakness in Crude Oil

Sugar Market Overview - Sugar prices are experiencing downward pressure due to a decline in crude oil prices, with WTI crude reaching a 4.75-year low, which may lead sugar mills to increase sugar production over ethanol, thereby boosting sugar supplies [1] - The India Sugar Mill Association (ISMA) reported a significant increase in Indian sugar production, with output from October 1 to December 15 rising by 28% year-on-year to 7.8 million metric tons (MMT) [2] Brazil Sugar Production - Brazil's sugar production outlook is also bearish, with Conab raising its 2025/26 sugar production estimate to 45 MMT from 44.5 MMT, and Unica reporting a 1.1% year-on-year increase in cumulative sugar output to 39.904 MMT [3] - The proportion of cane crushed for sugar in Brazil increased to 51.12% in 2025/26 from 48.34% in 2024/25 [3] Global Sugar Surplus Forecast - The International Sugar Organization (ISO) forecasts a sugar surplus of 1.625 million MT for 2025-26, reversing a deficit of 2.916 million MT in 2024-25, driven by increased production in India, Thailand, and Pakistan [4] - ISO projects a 3.2% year-on-year rise in global sugar production to 181.8 million MT for 2025-26, while Czarnikow has increased its global sugar surplus estimate to 8.7 MMT, up from 7.5 MMT [4] Indian Sugar Production and Exports - The ISMA has raised its 2025/26 India sugar production estimate to 31 MMT, an 18.8% year-on-year increase, while reducing the estimate for sugar used for ethanol production, potentially allowing for increased sugar exports [5] - India's National Federation of Cooperative Sugar Factories projects a 19% year-on-year increase in sugar production to 34.9 MMT for 2025/26, following a significant decline in production to a five-year low of 26.1 MMT in 2024/25 [6]