Just caught some interesting moves in the sugar markets today. NY March contracts are down slightly, while London May whites dropped a bit more. The whole selloff is basically being undercut by India ramping up production massively. Their sugar association just announced 2025/26 output hitting 29.3 MMT, which is like a 12% jump year-over-year. That's pretty significant coming from the world's second-largest producer.

What's keeping prices from tanking harder though is some real strength coming through Brazil. Their currency rallied to levels we haven't seen in almost two years, which makes their exports less attractive right now. Plus, they crushed way less cane for sugar in late January—down 36% compared to last year. But here's the thing: their cumulative output through January is still up 0.9% overall, so it's mixed signals.

The really wild part? Funds just hit record short positions in NY sugar futures. Last week's COT data showed them adding over 14,000 short contracts to reach 265,000 net shorts—highest since 2006. That's a lot of ammunition if we get any kind of short-covering bounce. Most analysts are calling for a global surplus though. Czarnikow, Green Pool, and StoneX are all projecting 2-3.4 MMT surpluses for this crop year, which is why the bearish pressure keeps building. India just approved another 500,000 MT for export on top of what they already cleared, so more supply is definitely coming to undercut any rally attempts. Thailand's also looking to boost production by 5%, so the supply story is pretty heavy right now.