Crude Oil Plunge Sends Sugar Prices Sliding to One-Week Lows
Sugar prices are sliding to one-week lows due to a sharp drop in crude oil prices. The WTI crude oil price has plummeted by over 5% today, adding to Monday's 7% decline. This downturn is pressuring ethanol prices and may lead sugar mills worldwide to divert less cane crushing towards ethanol production than sugar, resulting in higher sugar supplies.
India's improved monsoon rains are also contributing to lower sugar prices. The Indian Meteorological Department reported that India's cumulative monsoon rainfall was 16% below normal as of July 27, a significant improvement from 42% below normal on June 30.
The emergence of an El Niño weather pattern is expected to curb rainfall in Brazil, India, and Thailand, the world's top three sugar-producing regions. This could lead to higher sugar prices due to reduced global production.
Several forecasts predict a global sugar deficit for the upcoming season. StoneX raised its 2026/27 forecast for a global sugar deficit to -1.7 MMT from a May estimate of -550,000 MT, while Covrig Analytics cut its surplus forecast to 100,000 MT from a May estimate of 380,000 MT.