The sugar market is weighed down by a global glut, and a big crop coming from top grower Brazil means the problem is likely to persist.
New York sugar futures are already trading at about half of a 2023 peak, with consumption set to trail production in the current season by an estimated 1.63 million tons, buoyed by Asian producers India, Thailand and Pakistan.
Market watchers and analysts at the Dubai Sugar Conference earlier this week said they expect another surplus, albeit smaller, in the 2026-27 season, adding to the pressure on prices. An improved cane harvest in Brazil, the world's largest producer and exporter, is central to those forecasts.
“It's prolonging the surplus and potentially prolonging the period of low prices,” said John Adams, director of sugar research at GlobalData, a consultancy firm.
The excess of the sweetener may not be immediately apparent at the start of the season, as elevated ethanol prices will likely incentivize more biofuel production in Brazil. As the season progresses, and ample ethanol supply leads to a price convergence with sugar, more cane will be switched back to sugar production.
The market “looks pretty bearish,” said Stephen Geldart, the head of analysis at sugar trader Czarnikow.
India is expected to hold adequate stocks to meet domestic demand until the crushing of a larger crop begins in October. Meanwhile, continued exports from Europe, supported by carryover inventories even as production declines next season, will add to the glut.
The message from the Dubai conference was “unusually easy to summarize: bearish by default,” Arnaud Lorioz, the CEO of Paris-based brokerage Deepcore, wrote in a Friday note.
The one downside risk to production could be the emergence of a potential El Niño pattern. That would disrupt Asian cane crops in the 2026-27 season.
“I think for the time being the expectation is there will be a surplus, but there are lot uncertainties as far as El Nino is concerned,” said Adrie van der Ven, chief executive officer of Al Khaleej Sugar Co. “That could have a major impact on the crop.”
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