Sugar Futures at Near 1-Month Low

US sugar futures have been under pressure, trading near one-month lows of 18.4 cents per pound, mainly pressured by lower oil prices. Softer crude oil prices reduce the competitiveness of ethanol, encouraging mills to allocate a smaller share of sugarcane to biofuel production. Meanwhile, the global sugar supply outlook remains tight, with recent estimates pointing to a potential deficit in 2026/27 as production is expected to decline among key suppliers. El Niño poses an additional risk to global sugar production, with a strong event potentially bringing drier conditions to major producers such as Brazil, India and Thailand. In Brazil, the world’s largest producer and exporter, crop conditions and the split of sugarcane between sugar and ethanol remain important drivers of prices. Ethanol prices at mills in São Paulo state rose more than 2% last week as heavy rains delayed crushing and raised concerns about the volume of cane that can be processed during the 2026/27 season.

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.