Sugar Futures at 1-Week High

Sugar futures in the US traded slightly above 15 US cents, the highest in a week, reflecting concerns over the upcoming season and expectations of increased demand for biofuels. The International Sugar Organization (ISO) new estimates indicated a larger 2025/26 global sugar surplus of 2.244 million tons, compared with 1.22 million previously. However, it projected global sugar production in 2026/27 to fall 1.15% year-on-year to 180 MMT, resulting in a 262,000 MT deficit, citing potential El Niño-driven disruptions in India and Thailand. Ethanol production is forecast to rise from 123.1 to 129.4 billion litres in 2026, supported by a recovery in Brazil and expansion in India, with consumption at 126.9 billion litres, still below output. Meanwhile, Brazil’s fuel subsidies to offset higher gasoline and diesel prices from the Iran conflict are expected to support ethanol, potentially shifting sugar mills toward ethanol production.

Sugar futures in the US eased toward 14.7 US cents, the lowest in over a week, pressured by expectations of robust Brazilian supply. According to StoneX, the Central-South region, the country's main sugarcane producing hub, is expected to register the second largest harvest in history in the 2026/27 season, which began in April, amid better weather conditions compared to last year. The consulting firm estimates a milling volume of 632.2 million tons, above the forecast released in March of 620.5 million tons, and also higher than the volume of the 2025/26 harvest, which was 621.9 million tons. However, forecasts from multiple consulting firms pointing to a global deficit in the 2026/27 crop, along with India’s decision to ban sugar exports for at least four months due to supply concerns, limited the downside. The market also remained attentive to climate risks, including the El Nino phenomenon, and oil price volatility, which continues to directly affect the sugar and ethanol sectors.

Sugar futures in the US rose to 15.4 US cents, moving back to a more than one-month high on expectations of reduced output. The USDA’s May WASDE report revised down 2025/26 sugar production due to weak beet sugar recovery, partly offset by higher raw sugar imports, while overall use remained unchanged. For 2026/27, both beet and cane sugar production are expected to decline, with beet production pressured by reduced planted area and lower yields, and cane production affected by a winter freeze in Florida that damaged earlier plantings. Recently, Green Pool Commodity Specialists raised its estimate of the global sugar deficit for 2026/27 crop year from 1.66 million to 4.30 million tons, reflecting expectations of increased ethanol production amid persistently elevated oil prices.