Sugar Futures Remain Above 18 Cents

US sugar futures traded above 18 cents per pound, holding close to their highest since April 2025, amid lingering concerns over the supply outlook. Weather disruptions in Asia and Europe are tightening the global outlook, with recent estimates pointing to a potential deficit in 2026/27. Thai sugar production is expected to fall by at least 17% , while below-normal monsoon rainfall in India is adding to concerns over output. The European Union Sugar Market Observatory also reported recently that the bloc's production in the 2026/27 crop year is expected to fall by 19%. El Niño poses an additional risk to global sugar production, with a strong event potentially bringing drier conditions to major producers. In top producer Brazil, the outlook hinges on weather in the key Center-South region and how sugarcane is allocated between sugar and ethanol. According to a recent Itaú BBA analysis of Secex data, Brazil sugar shipments fell 33% yoy in August, while ethanol exports surged 37%.

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.