Crude Oil Power Sparks Brief Overlaying in Sugar Futures

October NY world sugar #11 (SBV25) on Tuesday closed up +0.21 (+1.34%), and October London ICE white sugar #5 (SWV25) closed up +3.60 (+0.75%).

Sugar costs settled greater Tuesday after an almost +1% rally in WTI crude oil (CLV25) sparked quick masking in sugar futures. Stronger crude costs profit ethanol costs and will immediate international sugar mills to divert extra cane crushing towards ethanol manufacturing slightly than sugar, thus decreasing sugar provides.

On Monday, NY sugar tumbled to a 4.25-year nearest-futures low, and London sugar fell to a 2.5-week low as a result of outlook for greater sugar manufacturing in Brazil. On August 29, Unica reported that Brazil’s Middle-South sugar output within the first half of August rose by +16% y/y to three,615 MT. Additionally, the share of sugarcane crushed for sugar by Brazil’s sugar mills within the first half of August elevated to 55.00% from 49.15% the identical time final yr. Nonetheless, cumulative 2025-26 Middle-South sugar output by mid-August is down -4.7% y/y to 22.886 MMT.

Covrig Analytics lately reported that Brazil’s sugar mills are prioritizing sugar manufacturing over ethanol, crushing extra cane for sugar. This development is predicted to proceed as harvesting peaks, pushed by drier cane crops that immediate mills to provide extra sugar.

On August 9, London sugar rose to a 3.75-month excessive after the Worldwide Sugar Group (ISO) forecast a worldwide sugar deficit for the 2025/26 season, the sixth consecutive yr of sugar deficits. The ISO tasks a worldwide 2025/26 sugar deficit of -231,000 MT, bettering from a -4.88 MMT shortfall in 2024/25. The ISO additionally tasks 2025/26 international sugar manufacturing will rise by +3.3% y/y to 180.6 MMT, and 2025/26 international sugar consumption will enhance +0.3% y/y to 180.8 MMT.

On August 19, Conab, Brazil’s authorities crop forecasting company, minimize its Brazil 2025/26 manufacturing estimate by 3.1% to 44.5 MMT from a earlier estimate of 45.9 MMT. In July, Conab reported that 2024/25 Brazil sugar manufacturing fell by -3.4% y/y to 44.118 MMT, citing decrease sugarcane yields as a result of drought and extreme warmth.

Expectations for plentiful sugar provides are undercutting sugar costs. On June 30, commodities dealer Czarnikow projected a 7.5 MMT international sugar surplus for the 2025/26 season, the most important surplus in 8 years. On Could 22, the USDA, in its biannual report, projected that international 2025/26 sugar manufacturing would enhance by +4.7% y/y to a report 189.318 MMT, with international sugar ending shares at 41.188 MMT, up 7.5% y/y.

The outlook for greater sugar exports from India is unfavourable for sugar costs after Bloomberg reported that India could allow native sugar mills to export sugar within the subsequent season, which begins in October, as plentiful monsoon rains could produce a bumper sugar crop. India’s Meteorological Division reported final Thursday that cumulative monsoon rain in India was 791.8 mm as of September 4, or 9% above regular. Additionally, the Indian Sugar and Bio-energy Producers Affiliation lately mentioned that it’s going to search permission to export 2 MMT of sugar in 2025/26.

The outlook for greater sugar manufacturing in India, the world’s second-largest producer, is bearish for costs. On June 2, India’s Nationwide Federation of Cooperative Sugar Factories projected that India’s 2025/26 sugar manufacturing would climb +19% y/y to 35 MMT, citing bigger planted cane acreage. That might comply with a -17.5% y/y decline in India’s sugar manufacturing in 2024/25 to a 5-year low of 26.2 MMT, in response to the Indian Sugar Mills Affiliation (ISMA).

The outlook for greater sugar manufacturing in Thailand is bearish for sugar costs. On Could 2, Thailand’s Workplace of the Cane and Sugar Board reported that Thailand’s 2024/25 sugar manufacturing rose +14% y/y to 10.00 MMT. Thailand is the world’s third-largest sugar producer and the second-largest exporter of sugar.

The USDA, in its bi-annual report launched Could 22, projected that international 2025/26 sugar manufacturing would climb +4.7% y/y to a report 189.318 MMT and that international 2025/26 human sugar consumption would enhance +1.4% y/y to a report 177.921 MMT. The USDA additionally forecasted that 2025/26 international sugar ending shares would climb +7.5% y/y to 41.188 MMT. The USDA’s International Agricultural Service (FAS) predicted that Brazil’s 2025/26 sugar manufacturing would rise +2.3% y/y to a report 44.7 MMT FAS predicted that India’s 2025/26 sugar manufacturing would rise +25% y/y to 35.3 MMT as a result of favorable monsoon rains and elevated sugar acreage. FAS predicted that Thailand’s 2025/26 sugar manufacturing will climb +2% y/y to 10.3 MMT.

On the date of publication, Wealthy Asplund didn’t have (both instantly or not directly) positions in any of the securities talked about on this article. All info and information on this article is solely for informational functions. This text was initially printed on Barchart.com