Sugar prices caught in a tug-of-war today. NY March contracts (+0.14%) and London white sugar (+0.35%) bounced to 3.5-week highs on hopes that India might raise ethanol prices—which could pull more sugarcane toward fuel instead of sweetener.

But here's the catch: crude oil tanked over -2%, making ethanol less attractive and likely pushing mills back to sugar production. Plus, supply forecasts are getting uglier. The International Sugar Organization just flipped its 2025-26 outlook from a 231k MT deficit to a whopping 1.625M MT surplus, mainly because India, Thailand, and Pakistan are ramping up output.

The real bear case? Brazil's crushers are working overtime. In October alone, center-south production jumped +16.4% year-over-year, with cumulative output through October up +1.6% y/y to 38.085M MT. Conab now expects Brazil to hit 45M MT in 2025/26—a record. India's also planning a bigger crop (ISMA raised its estimate to 31M MT, up +18.8% y/y), while the government may restrict exports to just 1.5M MT instead of 2M MT.

Bottom line: oversupply is the story. Global production is forecast to hit a record 189.3M MT while consumption grows just +1.4% y/y. Ending stocks are expected to balloon +7.5% y/y. Unless demand surprises hard, sugar stays under pressure.