Just caught the latest sugar moves and there's definitely some mixed signals here. NY sugar dropped yesterday closing down 1.23% from a 3-week high, while London white sugar barely budged up 0.20%. The real story though is China potentially slapping higher taxes on sugary beverages - that's undercut prices pretty hard if it actually happens since China's a huge demand driver.

On the supply side, Brazil's Center-South output took a hit with January production down 36% year-over-year, which normally would support prices. But the cumulative numbers for the season are still up 0.9% so far. Meanwhile, funds have gone extremely short on NY sugar futures - we're talking a record 265,324 net short positions as of mid-February. That's the most since 2006, which could set up a short-covering bounce if sentiment shifts.

Here's what's really undercut the market though: basically every analyst is calling for a global sugar surplus. USDA is forecasting production hitting a record 189.3 million MT while consumption only rises to 177.9 million MT. India's ramping up exports with an extra 500,000 MT approved for sale, and Thailand's also increasing output by 5% this season. Even Czarnikow upped their surplus estimate to 8.7 million MT.

The bearish pressure is real - India's the second-largest producer and they're flooding the market with more sugar. Thailand as the third-largest is also boosting production. These supply increases are definitely undercut any recovery attempts. Some analysts like Safras & Mercado expect Brazil's production to actually fall next year, but that's not enough to offset what's coming from India and Thailand. Market's basically pricing in that surplus staying around for a while.