Sugar Prices Drop as Crude Oil Declines: What’s Driving the Market?

Sugar prices slipped on Thursday after crude oil experienced a sharp fall. WTI crude dropped to a seven-week low, reducing the profitability of ethanol production. Since many sugar-producing countries can switch between producing sugar or ethanol, cheaper oil encourages mills to produce more sugar instead of ethanol, increasing global supply and pressuring sugar prices downward.

Recent Price Trends

Over the past week, sugar has been under steady pressure, sliding to its lowest level in three weeks. This decline is largely due to stronger-than-usual production figures from major producers like India and Brazil.

India’s Production Spike

The India Sugar Mills Association (ISMA) reported a significant jump in output for October–November, rising 43% year-on-year to 4.11 million metric tons.

As of November 30, 428 Indian mills were actively crushing cane — noticeably higher than 376 mills operating during the same period last year. This strong early-season performance signals the possibility of a large full-year crop.

Brazil’s Record Output Expectations

Brazil, the world’s largest sugar producer, is also contributing to global oversupply.

Conab, the country’s crop forecasting agency, increased its sugar production estimate for the 2025/26 season to 45 million metric tons, up from an earlier projection of 44.5 million.

Unica, Brazil’s main sugar-industry group, added to the bearish outlook by reporting:

•8.7% year-on-year growth in Center-South sugar output for the first half of November

•A 2.1% increase in total sugar production for the season, reaching 39.179 million metric tons by mid-November

Global Sugar Surplus Weighs on Prices

The International Sugar Organization (ISO) expects the world to shift from a deficit to a 1.625-million-ton surplus in 2025/26.

This change is driven by rising production in India, Thailand, and Pakistan.

Just a few months earlier, ISO predicted a deficit for the same season, showing how quickly global supply conditions have changed.

Because of this outlook, sugar prices have been sliding since October.

•On November 13, London sugar futures hit a 4.75-year low

•On November 6, New York sugar fell to a five-year low

The trading firm Czarnikow also raised its surplus estimate for 2025/26 to 8.7 million metric tons, up from the earlier 7.5-million-ton forecast.

India’s Higher Crop and Lower Ethanol Use Pressure Prices

India is again a key factor in global price weakness.

On November 11, ISMA raised its 2025/26 production estimate to 31 million metric tons, an 18.8% increase from last year.

India also slashed the amount of sugar expected to be diverted to ethanol — from 5 million tons down to 3.4 million — meaning even more sugar will be available for export.

Favorable monsoon rains, reported at 8% above normal, support expectations of an even larger harvest.

Export Policies and Climate Boost Output Expectations

India’s food ministry has approved 1.5 million metric tons of sugar exports for 2025/26. This is lower than early estimates but still large enough to influence global supply.

Meanwhile, the National Federation of Cooperative Sugar Factories projects India’s 2025/26 production could reach 34.9 million metric tons, boosted by expanded cane acreage.

Thailand’s Growing Crop Adds More Downward Pressure

Thailand, the world’s third-largest sugar producer, expects its 2025/26 crop to rise by 5% to 10.5 million metric tons.

The previous season already saw a strong recovery, with a 14% increase in output to 10 million tons.

USDA Outlook Confirms a Supply-Heavy Market

According to the USDA’s May 22 report:

•Global sugar production for 2025/26 is projected at a record 189.318 million metric tons

•Worldwide consumption is expected to reach 177.921 million tons, also a record

•Ending stocks are set to increase 7.5%

•Brazil may hit 44.7 million tons of production

•India could reach 35.3 million tons

•Thailand is expected to produce 10.3 million tons

Conclusion

Overall, the sugar market is facing broad downward pressure driven by:

•Lower crude oil prices

•Increased production in major countries

•Rising global surplus forecasts

•Larger export availability

•Strong weather conditions in India and Thailand

Until demand grows enough to absorb these large supplies, sugar prices are likely to remain under pressure.

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