Sugar Futures Near 2-Month Highs

Sugar futures in the US traded above 15 US cents, the highest level since mid-May, partly supported by higher oil prices, which encourage cane diversion to ethanol production and could tighten sugar output. At the same time, concerns over global supplies persisted, with a strengthening El Niño threatening crop production in key growing regions across Asia and the Americas. In India, weaker monsoon rains have raised concerns over lower sugar yields and a smaller sugarcane harvest, with insufficient rainfall potentially affecting both the current crop and the development of next season's harvest. Meanwhile, the market continued to monitor developments in top producer Brazil, where recent rainfall delayed harvesting in key growing regions. The latest data showed sugar production in Brazil's key Center-South region fell about 3% yoy to 2.31 million tons in the first half of June, pointing to continued growth in biofuel supply.

Sugar futures in the US traded around 14.8 US cents, the lowest in a week, as softer oil prices reduced incentives to divert sugarcane to ethanol production, improving the global sugar supply outlook. Meanwhile, India's strengthening monsoon reinforced expectations of higher sugar output after the world's second-largest producer entered a rainfall surplus in early July, with more rain forecast through mid-July. Despite improving near-term supply prospects, analysts expect weather-related supply risks to support prices over the medium term. El Niño continues to threaten crops in major producers such as India and Brazil, while Thailand remains under pressure from below-average rainfall and reduced planted area. Investors also monitored the pace of Brazil's harvest and mills' sugar-to-ethanol mix, as strong domestic ethanol demand continued. The latest data showed sugar production in Brazil's key Center-South region fell about 3% yoy to 2.31 million tons in the first half of June.

Sugar futures in the US extended their upward trend to around 14.9 US cents, near the highest since May 19, amid mounting weather concerns. An unusually strong El Niño event, a climate pattern associated with drier conditions in Asia-Pacific and increased rainfall in parts of the Americas, is posing risks to crops in major producing countries. Thailand is experiencing excessive dry conditions and India is expected to see below-normal July rainfall after its driest June in 12 years. Experts warned that weaker monsoon rainfall could reduce India’s annual sugar production by an estimated 3 million to 8 million tonnes. The government has already extended its sugar export ban until September 30. In Brazil, fundamentals remained supportive amid weaker output and harvest delays caused by recent rainfall. Data from Unica showed that sugar production in Brazil’s Center-South region reached 6.84 million tons by the end of May in the 2026/27 harvest, down 2% from the same period a year earlier.