March 19, 2026 — Sugar futures prices climbed sharply to five-month highs, fueled by a surge in global gasoline prices that is increasing demand for ethanol. The rally adds a new layer of volatility to a market recently focused on projections for a global surplus.
Energy Markets Drive Agricultural Shift
May New York world sugar futures closed up 3.85% on Thursday, with London white sugar also posting strong gains. Analysts linked the immediate price jump directly to energy markets. Gasoline futures rallied to a three-and-a-half-year high, making biofuel production more economically attractive.
This price relationship may encourage sugar mills, particularly in major producer Brazil, to divert more cane toward ethanol production. Such a shift would reduce the amount of cane crushed for sugar, tightening global supplies. The move extends a sharp rally seen throughout the week.
Supply Chain Disruptions Add Pressure
Further support for prices came from logistical constraints. The closure of the Strait of Hormuz has disrupted a key shipping route. According to analysis from Covrig Analytics, this has curtailed approximately 6% of the world’s sugar trade, constraining refined sugar output in several regions.
This disruption contrasts with recent market sentiment. Earlier in March, sugar prices had plunged to multi-year lows on persistent concerns about a global supply glut. Several major analysts had forecast significant surpluses for the current and upcoming crop years.
Conflicting Production Forecasts
Market forecasts present a mixed picture. On February 11, analysts from sugar trader Czarnikow projected a global sugar surplus of 3.4 million metric tons for the 2026/27 season. This would follow an estimated 8.3 MMT surplus in 2025/26.
Other firms offered different estimates. Green Pool Commodity Specialists, in a January 29 report, expected a 2.74 MMT surplus for 2025/26. StoneX, on February 13, forecast a 2.9 MMT surplus for the same period. The International Sugar Organization (ISO) added to the data on February 27, forecasting a 1.22 MMT surplus for 2025-26, driven by increased output in India, Thailand, and Pakistan.
Regional Output Signals Are Mixed
Production data from key regions shows divergent trends. In Brazil, a report from industry group Unica on February 18 showed sugar production in the Center-South region fell 36% year-over-year in the second half of January. However, cumulative output for the 2025-26 season through January remained slightly higher than the previous year.
India, the world’s second-largest sugar producer, reported robust production. The Indian Sugar and Bio-energy Manufacturers Association (ISMA) stated this week that output from October 1 to March 15 was up 10.5% year-over-year. ISMA also revised its estimate for sugar diverted to ethanol production downward, potentially freeing more sugar for export.
The Indian government approved an additional 500,000 metric tons of sugar for export on February 13. This move could pressure global prices if the supplies reach the market.
Long-Term Projections from USDA
In its bi-annual report released December 16, the U.S. Department of Agriculture projected global 2025/26 sugar production would climb 4.6% to a record 189.318 million metric tons. The USDA’s Foreign Agricultural Service predicted record output in Brazil and a significant increase in India, driven by favorable weather and expanded acreage.
For more detailed commodity analysis and market data, visit the USDA’s official site. Historical price data for sugar futures can be reviewed on the Intercontinental Exchange website.
What’s Next for Sugar Markets
The sugar market now faces a clash of fundamental forces. Strong ethanol demand linked to high energy prices is providing immediate bullish momentum. This competes with longer-term projections for ample harvests and government export policies aimed at managing domestic supplies in major producing nations. Traders will watch Brazilian mill allocation data closely in the coming weeks for signs of a sustained shift toward ethanol.
This article was produced with AI assistance and reviewed by our editorial team for accuracy and quality.
