The Outlook for a Global Sugar Surplus Weighs on Prices

Core Insights - Sugar prices have recently declined, with NY sugar reaching a 2-week low due to expectations of a persistent global sugar surplus [1] - The surge in crude oil prices, which increased by over 8% to a 19.5-month high, may lead sugar mills to shift production from sugar to ethanol, potentially reducing sugar supplies [2] Global Sugar Surplus Forecast - Analysts predict a global sugar surplus of 3.4 million metric tons (MMT) for the 2026/27 crop year, following an 8.3 MMT surplus in 2025/26 [3] - The International Sugar Organization (ISO) revised its forecast for the 2025/26 surplus to 1.22 MMT, down from an earlier estimate of 1.63 MMT, driven by increased production in India, Thailand, and Pakistan [4] Brazil's Sugar Production - Brazil's sugar production in the second half of January fell by 36% year-on-year to 5,000 MT, although cumulative production for 2025/26 is up by 0.9% year-on-year to 40.24 MMT [5] - Consulting firm Safras & Mercado forecasts a 3.91% decline in Brazil's sugar production for 2026/27 to 41.8 MMT, with expected exports dropping by 11% year-on-year to 30 MMT [6]