Sugar prices rose on Tuesday, driven by a rally in WTI crude oil. Stronger crude prices benefit ethanol production, prompting sugar mills to divert cane for ethanol over sugar, reducing sugar supplies. On Monday, sugar prices fell due to higher sugar production in Brazil, but cumulative output for 2025-26 is down -4.7% y/y.

Brazil’s sugar mills prioritize sugar production over ethanol due to drier cane crops, leading to a trend expected to continue. London sugar prices rose to a 3.75-month high in August after the International Sugar Organization forecasted a global sugar deficit for 2025/26. Brazil’s 2025/26 production estimate was cut by 3.1% to 44.5 MMT.

Expectations for abundant sugar supplies are causing a surplus, with projections of a 7.5 MMT global sugar surplus for the 2025/26 season. India may allow sugar exports next season due to abundant monsoon rains, potentially producing a bumper crop. India’s sugar production is projected to increase by +19% y/y to 35 MMT.

Thailand’s 2024/25 sugar production rose +14% y/y to 10.00 MMT, impacting global sugar prices. The USDA projected a record global 2025/26 sugar production of 189.318 MMT and an increase in human sugar consumption. Brazil and India are expected to see production increases, while Thailand’s production will climb +2% y/y to 10.3 MMT.

Read more at Yahoo Finance: Crude Oil Strength Sparks Short Covering in Sugar Futures