Sugar Posts Modest Gains as Crude Oil Rallies

Core Insights - Sugar prices experienced modest gains, influenced by rising crude oil prices, which increased by over 4% to an 8.5-month high, potentially leading sugar producers to shift more cane towards ethanol production, thereby reducing sugar supplies [2] Sugar Production and Surplus Forecasts - The International Sugar Organization (ISO) revised its forecast for the 2025-26 sugar surplus to +1.22 million metric tons (MMT), down from +1.63 MMT, following a deficit of -3.46 MMT in 2024-25, driven by increased production in India, Thailand, and Pakistan [4] - Analysts from Czarnikow expect a global sugar surplus of 3.4 MMT in the 2026/27 crop year, following an 8.3 MMT surplus in 2025/26, while Green Pool Commodity Specialists forecast a 2.74 MMT surplus for 2025/26 and a 156,000 MT surplus for 2026/27 [3] - Brazil's sugar production is projected to decline by -3.91% to 41.8 MMT in 2026/27, with exports expected to fall by -11% year-on-year to 30 MMT [6] Regional Production Insights - In Brazil, sugar production in the Center-South region fell by -36% year-on-year in the second half of January to 5,000 MT, although cumulative production through January is up by +0.9% year-on-year to 40.24 MMT [5] - India's sugar output from October 1 to February 28 increased by +12% year-on-year to 24.75 MMT, with the Indian Sugar and Bio-energy Manufacturers Association (ISMA) projecting total production for 2025/26 at 29.3 MMT, also a +12% increase year-on-year [7]