Just noticed sugar futures hitting their lowest levels in over 5 years. The March NY contract dropped another 0.43% today while the London ICE white sugar got hit harder at -2.12%. This 5-month downtrend isn't looking like it'll reverse anytime soon given what we're seeing in the supply numbers.

Multiple analysts are basically singing the same tune about global sugar surplus extending well into 2026/27. We're talking 3.4 million metric tons of excess supply expected next year according to recent reports, following an 8.3 MMT surplus this season. That's a lot of inventory to work through. Even more bearish, some commodity specialists are projecting surpluses closer to 4.7 million MT for this year depending on whose numbers you follow.

The real story here is production ramping up everywhere. Brazil's crushing more cane for sugar (hitting 50.78% of their crush ratio), India just reported output up 22% year-over-year and they're now allowed to export more to clear their domestic glut, and Thailand's expected to push production higher too. India's the second-largest producer globally and if they're flooding the export market, that's pressure on prices nobody wants.

What caught my eye this week was the fund positioning data. Shorts in NY sugar futures just hit a record 239,000 contracts net short. That's the most extreme positioning since 2006. Usually that kind of extreme can spark some short-covering bounces, but with this much physical supply coming, any rally could be a selling opportunity.

The USDA's latest forecast has global production climbing 4.6% to a record 189 million MT while consumption only grows 1.4%. That math doesn't work for prices. Only bright spot might be Brazil's 2026/27 production potentially dropping 3.91%, but that's still a year away. For now, sugar market news is all about managing the surplus.