Sugar Futures at 2020-Lows

Sugar futures in the US rose to near 15.4 US cents, up from two-week lows of 15.2 hit on April 1st, largely driven by surging oil prices amid renewed concerns over the Middle East conflict. Higher oil prices encourage producers to allocate more sugarcane to ethanol, which reduces the global sugar supply. Hedgepoint Global Markets pointed out that the global sugar market remains largely unchanged in its fundamentals, with price dynamics being primarily influenced by external factors and technical movements. Market participants remain focused on the evolution of supply, especially in Brazil, where favorable weather conditions and stable estimates indicate prospects for greater availability. Reflecting this, Czarnickov raised its global production estimate for the 2025/26 season by 100,000 tons to 184.5 million metric tons, the second-highest on record, even after revising down India’s output.

Sugar futures in the US continued to fall to near 15.2 US cents, reaching the lowest in two weeks, partly influenced by falling crude oil prices on easing geopolitical concerns. Hostilities in the Middle East have recently pushed sugar prices to near six-month highs, as the conflict severely disrupted maritime traffic through the Strait of Hormuz, a key route for raw sugar destined for local refineries and white sugar exports. Nevertheless, ample global supply, particularly from Brazil, continues to weigh on prices. On March 27, Unica reported that accumulated sugar production in the Center-South region for the 2025/26 harvest increased 0.7% year-on-year to 40.25 million tons. Notably, the share of sugarcane allocated for sugar production rose to 50.61%, up from 48.08% last year. Meanwhile, Czarnickov raised its global production estimate for the 2025/26 season by 100,000 tons to 184.5 million metric tons, the second-highest on record, even after revising down India’s output.

Sugar futures in the US eased to around 15.6 US cents, down from recent five-month highs of nearly 15.9 US cents, amid higher output in top producer Brazil. On March 27, Unica reported that cumulative 2025-26 Center-South sugar output, from October through mid-March, increased 0.7% y/y to 40.25 MMT, with sugar mills boosting the amount of cane crushed for sugar to 50.61% from 48.08% last year. In recent days, the market has been heavily influenced by oil price fluctuations amidst the Middle East crisis and expectations regarding the direction of mill production in the next harvest. According to consultancy Safras & Mercado, the country's total sugar production could fall to 40.3 million tons in the 2026/27 harvest, which begins in April, compared to 43.5 million tons in the previous cycle, as mills direct more sugarcane to ethanol production in the face of high oil prices.