Sugar Quotes Rebound as Dollar Weakness Drives Technical Recovery

Sugar quotes made a notable comeback on Tuesday, with nearby futures contracts posting solid gains after hitting multi-month lows just one day earlier. March New York sugar #11 closed up 0.37 cents (+2.59%), while March London ICE white sugar #5 advanced 12.40 points (+3.06%). The rebound was primarily driven by weakness in the US dollar, which sparked a wave of short covering in sugar futures markets and temporarily overshadowed bearish fundamental concerns about global oversupply.

The overnight price action reflected classic technical dynamics: after Monday’s capitulation to fresh 2.5-month lows in New York and 5-year lows in London, the sharp reversal suggested that speculative shorts had become crowded. When the dollar index retreated, the rush to cover existing short positions accelerated the upside move in sugar quotes, a common pattern in currency-driven commodity markets.

Dollar Weakness Triggers Technical Adjustment

The driving force behind Tuesday’s bounce in sugar quotes was the depreciation of the US dollar against major currencies. A weaker dollar typically boosts the appeal of commodities priced in the currency, making them cheaper for international buyers and prompting traders holding short positions to exit. This mechanical relationship between currency markets and sugar prices illustrated how macro factors can temporarily override supply-side considerations.

Global Supply Glut Remains the Core Bearish Driver

Despite the short-term technical bounce in sugar quotes, the fundamental backdrop remains decidedly negative. Multiple international forecasters have pointed to mounting global surpluses that are likely to continue weighing on prices. The International Sugar Organization (ISO) reported on November 17 that global sugar output is expected to exceed consumption by 1.625 million MT in 2025-26, reversing the prior year’s deficit of 2.916 million MT. This shift toward surplus is driven by accelerating production in India, Thailand, and Pakistan—three major producing nations expanding their output significantly.

Global sugar production is projected to reach record levels across 2025-26. The USDA, in its December 16 report, forecast that global sugar production would rise 4.6% year-over-year to a record 189.318 million MT, while human consumption would increase only 1.4% to 177.921 million MT. This production-consumption mismatch is the structural factor exerting long-term pressure on sugar quotes.

Brazil’s Record Harvest Sets Supply Ceiling High

Brazil, the world’s largest sugar producer, is poised to deliver record output that will keep global supply ample for years. Conab, Brazil’s official crop forecasting agency, raised its 2025-26 production estimate to 45 million MT on November 4, up from an earlier forecast of 44.5 million MT. The USDA’s Foreign Agricultural Service (FAS) projects an even higher figure of 44.7 million MT for 2025-26, a 2.3% increase year-over-year. This massive supply will support Brazil’s export ambitions and limit upside potential for sugar quotes.

On a more supportive note, Safras & Mercado projected on December 23 that Brazil’s 2026-27 sugar production would decline 3.91% to 41.8 million MT from the expected 45 million MT in 2025-26. Additionally, Brazil’s sugar exports are forecast to fall 11% year-over-year to 30 million MT in 2026-27. This pullback in future years could provide some support for sugar quotes, but only after the near-term surplus period has run its course.

India’s Output Boom and Export Expansion

India, the world’s second-largest sugar producer, is ramping up production dramatically, which is weighing significantly on sugar quotes globally. Through January 15, 2026, India’s sugar output for the 2025-26 season reached 15.9 million MT, up 22% year-over-year, according to the India Sugar Mill Association (ISMA). The ISMA also raised its full-year 2025-26 production estimate to 31 million MT in November, representing an 18.8% year-over-year increase. The FAS is even more bullish, projecting India’s 2025-26 output at 35.25 million MT, a 25% year-over-year surge driven by favorable monsoon rains and expanded sugar acreage.

A critical factor in India’s supply equation is the government’s move to expand sugar exports. India’s food ministry authorized mills to export 1.5 million MT of sugar in the 2025-26 season, a loosening of the quota system first introduced in 2022-23. Furthermore, India’s food secretary indicated the government may permit additional exports to relieve domestic supply glut. This export expansion means more Indian sugar is flowing into global markets, adding to downward pressure on sugar quotes worldwide.

Thailand’s Production Gains

Thailand, the world’s third-largest sugar producer and second-largest exporter, is also increasing output. The Thai Sugar Millers Corp projected on October 1 that Thailand’s 2025-26 sugar crop would rise 5% year-over-year to 10.5 million MT. The USDA’s FAS estimates a more modest 2% year-over-year increase to 10.25 million MT for 2025-26. Either way, increased Thai exports will continue to supply global markets and limit recovery potential for sugar quotes.

The Surplus Outlook Differs Among Forecasters

Different analytical firms have estimated the scale of the global oversupply differently, which affects their price outlook. Green Pool Commodity Specialists expects a 2.74 million MT global surplus for 2025-26 and a 156,000 MT surplus for 2026-27. StoneX projected a slightly higher surplus of 2.9 million MT for 2025-26. However, sugar trader Czarnikow is far more bearish, estimating a global surplus of 8.7 million MT in 2025-26, while Covrig Analytics raised its estimate to 4.7 million MT. These wide forecasting ranges underline the uncertainty surrounding supply-demand balances, though all point to surplus conditions.

Market Dynamics and Price Trajectory for Sugar Quotes

The rebound in sugar quotes on Tuesday illustrates how short-term technical factors and currency movements can create tactical bounces within a longer-term bearish trend. The fundamental reality—record or near-record global sugar production paired with modest demand growth—remains the key driver of the underlying downtrend in sugar quotes. With multiple producing nations expanding output and major exporters ramping up shipments, the structural surplus is unlikely to reverse quickly.

For traders monitoring sugar quotes, the current environment suggests that tactical opportunities may emerge from oversold conditions, but any meaningful rallies could attract new supply and draw selling from competitors seeking to capture higher export prices. Until supply-side dynamics shift materially—such as the production cuts forecast for Brazil in 2026-27—sustained upside for sugar quotes faces structural headwinds. The December forecast that global sugar ending stocks would fall only 2.9% year-over-year to 41.188 million MT underscores the persistence of ample supplies in the years ahead.