Sugar Futures Ease to 1-Week Lows

Sugar futures in the US fell below 15 US cents, reaching one-week lows, pressured by lower oil prices, which reduce incentives to divert sugarcane toward ethanol production and could boost sugar output. Investors also monitored the recovery of India's monsoon, which has eased some concerns over global supplies, although broader structural factors continue to support the market. The rainfall deficit narrowed to 15% below the historical average by July 8, a marked improvement from the 42% shortfall recorded at the end of June. However, India's Ministry of Earth Sciences continues to warn that this year's monsoon could still be the weakest in 11 years. Rainfall between June and September is critical for sugarcane development. Meanwhile, the El Nino risk remained a concern. The weather phenomenon typically causes drought and heat in major sugar-producing countries like India and Thailand, while it can also favor excessive rainfall during the harvest in Brazil.

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.