Sugar Prices Settle Higher on Brazilian Real Strength

July NY world sugar #11 (SBN26) on Friday closed up +0.15 (+1.03%), and Aug London ICE white sugar #5 (SWQ26) closed up +0.10 (+0.02%).

Sugar prices settled higher on Friday, supported by strength in the Brazilian real.  The real (^USDBRL) rose +0.56% on Friday, just below Wednesday's 2.25-year high.  The stronger real discourages export sales from Brazil's sugar producers.

On Thursday, sugar prices fell to 1-week lows after gasoline prices (RBM26) fell by more than 8% over the past three sessions, which undercut ethanol prices and weighed on sugar prices.  According to Covrig Analytics, falling ethanol prices are already prompting Brazilian sugar mills to divert sugarcane away from ethanol production toward sugar, as sugar prices are currently 0.7 to 1 cent per pound more profitable to produce than ethanol.  

Last Thursday, Unica reported that 2026/27 Brazil Center-South sugar production in the first half of April fell -11.9% y/y to 647 MT, with mills cutting the amount of cane crushed for sugar production to 32.9% from 44.7% last year.  Last Tuesday, Conab, in its initial report for the new sugar season, reported that 2026/27 Brazilian sugar output will decline by -0.5% to 43,952 MT, while ethanol output will climb by +7.2% y/y to 29,259 million liters.  On April 21, the USDA forecast Brazil's 2026/27 sugar production at 42.5 MMT, down -3% y/y, citing millers crushing more cane for ethanol than for sugar.  

Sugar prices have found some support amid concerns about supply disruptions stemming from the ongoing closure of the Strait of Hormuz.  According to Covrig Analytics, the closure of the strait has curbed approximately 6% of the world's sugar trade, constraining refined sugar output.

Sugar prices were pressured last month when India's Food Secretary said the government has no plans to ban sugar exports this year, easing concerns that it could divert more sugar to make ethanol following the Iran war disruption to crude oil supplies.  On February 13, India's government approved an additional 500,000 MT of sugar for export for the 2025/26 season, on top of the 1.5 MMT approved in November.  India introduced a quota system for sugar exports in 2022/23 after late rain reduced production and limited domestic supplies.  Meanwhile, the USDA on Thursday said it expects a 2026/27 sugar surplus in India of 2.5 MMT, the first surplus in two years.  India is the world's second-largest sugar producer.

Signs of a smaller global sugar surplus are supportive for prices.  On April 21, Covrig Analytics cut its 2026/27 global sugar surplus estimate to 800,000 MT from 1.4 MMT previously.  On April 20, sugar trader Czarnikow cut its 2026/27 global sugar surplus estimate to 1.1 MMT from 3.4 MMT in February, and cut its 2025/26 surplus estimate to 5.8 MT from 8.3 MMT.  

On April 16, India's National Federation of Cooperative Sugar Factories Ltd. reported that India's 2025-26 sugar production from Oct 1-Apr 15 was up +7.7% y/y to 27.48 MMT.  On March 11, the Indian Sugar and Bio-energy Manufacturers Association (ISMA) projected India's 2025/26 sugar production at 29.3 MMT, up 12% y/y, below an earlier projection of 30.95 MMT.  The ISMA also cut its estimate for sugar used for ethanol production in India to 3.4 MMT from a July forecast of 5 MMT, which may allow India to boost its sugar exports.

The International Sugar Organization (ISO) on February 27 reported a +1.22 MMT (million metric ton) sugar surplus in 2025-26, following a -3.46 MMT deficit in 2024-25.  ISO said the surplus was driven by increased sugar production in India, Thailand, and Pakistan.  ISO reports a +3.0% y/y rise in global sugar production to 181.3 million MMT in 2025-26.  

The USDA, in its bi-annual report released on December 16, projected that global 2025/26 sugar production would climb +4.6% y/y to a record 189.318 MMT and that global 2025/26 human sugar consumption would increase +1.4% y/y to a record 177.921 MMT.  The USDA also forecast that 2025/26 global sugar ending stocks would fall by -2.9% y/y to 41.188 MMT.  The USDA's Foreign Agricultural Service (FAS) predicted that Brazil's 2025/26 sugar production would rise by 2.3% y/y to a record 44.7 MMT.  FAS also predicted that India's 2025/26 sugar production would increase by 25% y/y to 35.25 MMT, driven by favorable monsoon rains and increased sugar acreage.  In addition, FAS predicted that Thailand's 2025/26 sugar production will increase by +2% y/y to 10.25 MMT.