Sugar Futures at Near 1-Week High

Sugar futures in the US rose to near 14 cents per pound, their highest level in nearly a week, as surging oil prices linked to the Middle East conflict raised fears of lower sugar output. Higher oil prices makes ethanol production more profitable, encouraging producers to allocate more sugarcane to biofuel. This shift could lead Brazil, the top global sugar producer, to prioritize ethanol over sugar, reducing international supply of the sweetener. Meanwhile, the latest quarterly market outlook from the International Sugar Organization (ISO) confirmed a scenario of ample global supply. The ISO expects the sugar crop to return to a surplus of 1.22 million tons in 2025/26, following a 3.46-million-ton deficit in 2024/25, though slightly below its previous estimate of 1.63 million tons. Global production is expected to rise 3% to 181.3 million tons, supported by strong harvests in India, Thailand, and Pakistan. World consumption is seen at 180.069 million tonnes.

Sugar futures in the US extended gains, rising above 14.1 cents per pound to the highest in over two weeks, driven in part by a stronger Brazilian real, which makes Brazilian sugar more expensive abroad, limiting exports and supporting global prices. Recent reports of lower-than-expected production in India, where excessive rain has reduced cane yields, have also helped underpin prices. Reuters cited internal estimates from five trade houses, which put India’s 2025/26 sugar production at 28.5–29 million metric tons, compared with ISMA’s forecast of 30.95 million earlier this month. Meanwhile, the US Supreme Court’s decision to overturn Trump-era tariffs could open the door for higher Brazilian sugar exports to the US, with potential implications for global supply. Brokers see signs that the prolonged price decline may be over, but abundant global supply is expected to limit a strong short-term recovery.

Sugar futures in the US rose slightly to around 13.7 cents per pound, the highest since February 10, as the market consolidates following last week’s 2020-year lows, partly due to short-covering. The recent decline in prices has made the commodity attractive to individual buyers, triggering a wave of pent-up demand. Asian exporters reported increased purchasing flows, driven by the need for post-Ramadan restocking. Meanwhile, indications that India’s crop may be smaller than previously expected added further support. Despite the slight bounce, the upside potential for prices remains constrained by strong oversupply fundamentals. Czarnikow projected global surpluses of 8.3 million tons in 2025/26 and 3.4 million tons in 2026/27, while Green Pool and StoneX estimated 2.7–2.9 million tons for the current cycle. The scenario of abundance is reinforced by Brazilian data. Sugar production in Brazil’s Center-South reached 40.236 million tons by mid-January, up 0.9% from the previous harvest.