Crude Oil Strength Sparks Short Covering in Sugar

Sugar prices rise as higher crude oil prices boost ethanol production, curbing sugar supplies

Apr. 16, 2026 at 6:06pm

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An abstract illustration composed of overlapping triangles and circles in shades of blue, orange, and green, conceptually representing the interconnected forces shaping the global sugar market.Crude oil's impact on the global sugar market exposes the industry's complex supply and demand dynamics.NYC Today

Sugar prices are moving higher today as a +2% rally in crude oil price sparked short covering in sugar futures. Higher crude prices boost ethanol prices and could prompt global sugar millers to divert more cane crushing toward ethanol production rather than sugar, thus curbing sugar supplies. Sugar prices have been under pressure for the past two weeks amid expectations of abundant global supplies and tepid demand.

Why it matters

The outlook for the global sugar surplus to persist is weighing on prices, but the recent crude oil price surge could lead sugar producers to shift more production to ethanol, potentially tightening sugar supplies and supporting higher prices. This highlights the interconnected nature of the energy and agricultural commodity markets.

The details

Sugar prices are moving higher today as a +2% rally in crude oil price (CLK26) sparked short covering in sugar futures. Higher crude prices boost ethanol prices and could prompt global sugar millers to divert more cane crushing toward ethanol production rather than sugar, thus curbing sugar supplies. On Wednesday, NY sugar sank to a 5.5-year nearest-futures low, but prices have rebounded today. Sugar prices have been under pressure for the past two weeks amid expectations of abundant global supplies and tepid demand.

  • On Wednesday, NY sugar sank to a 5.5-year nearest-futures low.
  • On March 30, NY sugar rallied to a 6-month high, and London sugar climbed to a 6.25-month high, driven by strength in crude oil prices.

The players

Czarnikow

A sugar trader that expects a global sugar surplus of 3.4 MMT in the 2026/27 crop year.

Green Pool Commodity Specialists

An organization that expects a global sugar surplus of 2.74 MMT for 2025/26 and 156,000 MT for 2026/27.

StoneX

A firm that expects a global sugar surplus of 2.9 MMT in 2025/26.

International Sugar Organization (ISO)

Forecasted a +1.22 MMT sugar surplus in 2025-26, following a -3.46 MMT deficit in 2024-25.

India's Food Secretary

Stated the government has no plans to ban sugar exports this year, easing concerns that it could divert more sugar to make ethanol.

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What they’re saying

“We expect a global sugar surplus of 3.4 MMT in the 2026/27 crop year, following an 8.3 MMT surplus in 2025/26.”

— Czarnikow, Sugar trader

“We expect a global sugar surplus of 2.74 MMT for 2025/26 and 156,000 MT for 2026/27.”

— Green Pool Commodity Specialists, Organization

“We expect a global sugar surplus of 2.9 MMT in 2025/26.”

— StoneX, Firm

“We forecast a +1.22 MMT sugar surplus in 2025-26, following a -3.46 MMT deficit in 2024-25.”

— International Sugar Organization (ISO), Organization

“The government has no plans to ban sugar exports this year, easing concerns that it could divert more sugar to make ethanol.”

— India's Food Secretary

The takeaway

The recent crude oil price surge has sparked short covering in sugar futures, as higher energy prices could lead sugar producers to shift more production to ethanol, potentially tightening sugar supplies. However, the outlook for a persistent global sugar surplus continues to weigh on prices, highlighting the complex interplay between energy and agricultural commodity markets.