Sugar Futures Hover at 17-Month Highs

US sugar futures traded around 18.5 cents per pound, close to their highest level since April 2025, amid mounting supply concerns and firm oil prices, which could encourage more cane to be used for ethanol. The market remains supported by expectations of lower production in key producers, particularly India and Thailand, while crop conditions in Brazil and Europe continued to be monitored. Prices have surged nearly 30% this year as the outlook shifts from a surplus to a deficit in the 2026-27 season, with the International Sugar Organization (ISO) forecasting a global shortfall of roughly 260,000 tonnes. A strengthening El Niño and below-normal monsoon rainfall in India are raising concerns over sugar supplies across Asia. Elsewhere, heavy rains in Brazil’s Center-South are disrupting sugarcane harvesting and crushing. Meanwhile, India’s import plans remain in focus as the country seeks to boost domestic supplies to curb record prices, potentially adding to global demand pressure.

US sugar futures eased toward 18 cents per pound after reaching near 1½-year highs in early September, as the market moved into consolidation. Prices are facing pressure from India, where measures to boost domestic sugar availability could reduce import requirements. However, losses are being limited by expectations of tighter global supplies in 2026/27. The ISO forecasts a shift from a 1.1 million-tonne surplus in 2025/26 to a 200,000-tonne deficit in 2026/27, with production expected to decline 1% to 180.1 million tonnes. The outlook takes into account, among other factors, the potential impact of the El Niño phenomenon on major producing regions across South and Southeast Asia, particularly India and Thailand. Thai sugar production is expected to fall by at least 17% to below 10 million tonnes, while below-normal monsoon rainfall in India is adding to concerns over output. Concurrently, higher oil prices encourage Brazilian mills to allocate more cane to biofuel production.

US sugar futures traded above 18 cents per pound, holding close to their highest since April 2025, supported by prospects of tightening global supply. El Niño-related climate woes and elevated energy prices amid the Middle East war also remained supportive. The ISO indicated that the global sugar market is expected to shift from a 1.1 million-tonne surplus in 2025/26 to a 200,000-tonne deficit in 2026/27, with production estimated to decline 1% to 180.1 million tonnes. Potential El Niño-related crop disruptions in India and Thailand were among the main risks to the outlook. This comes in line with recent projections from several consultancies indicating a potential deficit in 2026/27. European production is another source of concern for the market. The European Union Sugar Market Observatory reported that the bloc's production in the 2026/27 crop year is expected to fall by 19%, to 13.4 million tons. Meanwhile, India expects below-normal September rains after an already dry August.