Sugar Futures at Near 2-Month High

Sugar futures in the US rose above 14.7 cents per pound, reaching the highest since late January, as the market remains sensitive to oil price movements. Higher oil prices amid the Middle East crisis make ethanol production more attractive, prompting mills to divert more sugarcane to biofuel at the expense of sugar output. Ethanol production in top producer Brazil is forecast to rise by some 4 billion liters in the 2026/27 season from a year earlier, which would set a record level, according to industry sources. Meanwhile, abundant supply prospects, primarily from India and Brazil, continued to shape market fundamentals. Recent Reuters forecasts indicated a shift from a surplus of 1.39 million tons in 2025/26 to a 1.5 million ton deficit in 2026/27, amid anticipated changes in how India and Brazil allocate sugarcane between sugar and ethanol production.

Sugar futures in the US eased further to trade slightly below 14.3 cents per pound, down from recent one-month highs of 14.6 per pound, pressured by ample global supply, which helped temper recent volatility from oil price swings driven by geopolitical tensions. The consulting firm Hedgepoint noted that the 2025/26 season continues to point to an oversupplied market, supported by strong Brazilian production and expectations of Northern Hemisphere recovery. Meanwhile, market fundamentals show that while global sugar supply still exceeds demand, the margin is narrowing. Broker StoneX cut its forecast for a global sugar surplus in the current 2025/26 season to just 870,000 tons from 2.9 million tons, driven by India’s reduced harvest and shifts in Brazil’s production patterns.

Sugar futures in the US eased to near 14.3 cents per pound, down from one-month highs of 14.6 hit on March 9, amid a pullback in oil prices amid hopes of a swift end to the Middle East crisis. President Trump said in an interview with CBS News that he thought the war against Iran was "very complete" and that Washington was "way ahead" of its initial estimated timeframe of four to five weeks. This alleviated fears that sugar mills worldwide, particularly in top producer Brazil, might divert more sugarcane to ethanol production, potentially limiting sugar output. Most ethanol in Brazil is made from sugarcane, meaning increased cane allocation for the biofuel would reduce the raw material available to produce the sweetener. Meanwhile, a Reuters poll recently indicated sugar prices are expected to end the year about 10% above current levels, amid an anticipated shift in the global market from a surplus of 1.39 million tons in 2025/26 to a 1.5 million ton deficit in 2026/27.