Sugar prices are up today due to a rally in crude oil prices, prompting short-covering in sugar futures. Crude oil surged over 5%, benefiting ethanol prices and diverting cane crushing towards ethanol production rather than sugar, reducing sugar supplies.

Brazil’s sugar output increase, projected sugar surpluses globally, and India’s potential for a record sugar production are pressuring sugar prices. Brazil’s Center-South sugar output rose by 10.8% y/y, with projections of a 3.9% y/y increase in 2026/27. India’s monsoon rains may lead to a 19% y/y production hike.

India’s plan to divert sugar for ethanol production may prompt higher exports, adding to bearish pressure on sugar prices. Thailand also expects a 5% y/y increase in sugar production, contributing to the bearish outlook. The International Sugar Organization forecasts a global sugar deficit, the sixth consecutive year of deficits.

The USDA projects record global sugar production and consumption for 2025/26, with Brazil, India, and Thailand expected to increase production. Ending stocks are forecasted to rise, contributing to the bearish sugar market outlook. Rich Asplund, on the date of publication, did not have any positions in mentioned securities.

Read more at Yahoo Finance: Surge in Crude Prices Sparks Short Covering in Sugar