Soft Landing for Sugar #11? What Cane Futures Signal into 2028

The global sugar cane market is entering a phase of relative price calm after several years of sharp swings, with ICE #11 raw sugar futures now trading in a tight band and a mildly rising forward curve out to 2028. As of 13 March 2026, the May 2026 ICE #11 contract settled at 14.37 US¢/lb, with later deliveries gradually stepping up to 16.32 US¢/lb by October 2028. This structure points to a market that is no longer in acute shortage but still prices in medium‑term risk premia linked to weather in Brazil, policy in India, and the evolving ethanol landscape. Recent volume of over 120,000 lots on the ICE #11 strip confirms that speculative and commercial interest remains robust in this consolidation phase. At the same time, refined Brazilian ICUMSA 45 export offers out of São Paulo (FOB) have firmed modestly since October 2024, signaling that physical premiums remain underpinned even as the futures flat price drifts sideways in the mid‑teens cent range.

Fundamentally, global balances are shifting from the tightness seen in 2023–24 toward a more comfortable surplus in 2025–26 as output recovers in Thailand and India while Brazil still grinds a large cane crop, albeit with some yield pressure from drought. Analysts project global production around the high‑180s to low‑190s million tonnes, a level consistent with only a small surplus once expanding consumption and structural biofuel demand are factored in. India’s policy pivot—loosening caps on sugar diversion to ethanol but also preparing export quotas to absorb likely surpluses—adds a policy‑driven buffer to the market, while Thailand’s expected multi‑year recovery in cane area and yields rebuilds exportable supply to Asia and the Middle East. Weather, however, remains a core risk: lingering drought signals in Brazil and the broader South American region, together with localized extremes in Asia, mean that the seemingly benign forward curve should not be mistaken for a world without supply shocks. Against this backdrop, sugar cane producers, refiners, and industrial users face a classic mid‑cycle environment: prices are no longer distressed but still offer hedging opportunities on both sides, provided that market participants pay close attention to regional weather patterns, ethanol margins, and evolving government policies.

Prices & Futures Structure

ICE #11 Raw Sugar Futures (Core Raw Text)

The Raw Text clearly shows a relatively flat nearby market and a gently upward‑sloping curve further out:

Note: EUR/tonne estimates assume 1 US¢/lb ≈ 22 EUR/t at current FX levels and are rounded.

• The curve shows mild contango from May 2026 (~316 EUR/t) to late 2028 (~359 EUR/t), indicating expectations of slightly higher long‑term costs of production and/or risk premia rather than immediate shortage.
• Day‑on‑day moves on 13 March 2026 were very small (±0.01–0.04 US¢), consistent with a market in consolidation after prior volatility.
• Total volume across the strip reached about 121,000 contracts in the session, consistent with high liquidity and active hedging interest.

Spot & Physical Refined Sugar (Brazil, FOB São Paulo)

While the Raw Text focuses on ICE #11 raw sugar, physical refined prices in Brazil help gauge cane sector margins. Recent ICUMSA 45 FOB São Paulo offers show a gentle firming in late 2024:

• The ~510–530 EUR/t range for refined export sugar in Brazil sits at a premium over the ~316–320 EUR/t equivalent ICE #11 nearby raw sugar, leaving room for refining margins, logistics, and risk premia.
• The late‑October 2024 firming in offers aligns with a period of stronger futures and a still‑tight global balance, while the current futures strip suggests normalization but not collapse in physical values.

Supply & Demand Landscape

Global Balance and USDA/WASDE Context

• Recent WASDE and allied analyses point to global sugar production around the high‑180s to low‑190s million tonnes in 2025/26, up from roughly 186 Mt in 2022–23 and an estimated 194 Mt in 2023–24, implying a modest surplus but not a glut.
• USDA and other agencies broadly see raw sugar trade flows as mostly balanced through 2025–26, with some rebuilding of inventories after the tightness of 2023–24.
• From the Raw Text perspective, the gentle contango in ICE #11 (about 43 EUR/t from May 2026 to Oct 2028) is consistent with a neither severely tight nor oversupplied global balance—markets pay more for time and risk, but without extreme backwardation.

Regional Production Highlights

Brazil (Center‑South)

• Brazil’s Center‑South remains the key swing producer. Consulting and trade sources see cane crush around 600 Mt in 2024/25, slipping to about 580 Mt in 2025/26 as drought and wildfire damage reduce yields.
• The sugar mix in 2025/26 is projected around 51–52%, sustaining high sugar output even if some cane is diverted to ethanol, thanks to favorable sugar/ethanol parity conditions.
• Severe multi‑year drought in Brazil—covering up to 60% of the country by 2024—continues to pose a downside risk to cane yields and SUC (sucrose content), reinforcing the modest risk premium observed in the ICE #11 forward curve.

India

• India’s sugar production in 2025/26 is projected to rise by about 18% to ~30.9–31.5 Mt, even after diverting roughly 3.4–3.5 Mt of sugar to ethanol, driven by improved cane supplies and better monsoon conditions.
• The government has signaled plans for a 1.5 Mt export quota in 2025/26 after two years of tight export controls, in order to manage surplus stocks from lower‑than‑expected ethanol diversion.
• Policy has shifted again with the removal of quantitative caps on sugar diversion to ethanol for ESY 2025–26, effectively giving policymakers a tool to toggle between exports and ethanol depending on domestic balances and price levels.

Thailand

• Thailand, the world’s second‑largest exporter, is expected to see a multi‑year recovery in sugar output. Analysts project sugar production rising by 18% in 2025/26 to around 13.2 Mt, potentially the highest in seven years.
• Other forecasts, including recent crop‑monitoring analysis, project output closer to 10–11.7 Mt, with exports recovering to ~7 Mt and stocks moderating around 10 Mt—still a significant recovery from drought‑hit seasons.
• Cane area has expanded where cane returns exceed cassava, but analysts expect this to be partially cyclical, with some contraction again beyond 2026/27 as price signals change.

Other Regions

• In the United States, sugar policy remains tightly managed. USDA loan rates for the 2025 crop (fiscal year 2026) have been set to support beet and cane growers, with no activation of the Feedstock Flexibility Program, indicating that domestic supplies are considered adequate at current price levels.
• Other exporters (EU, Central America) are broadly stable, contributing incremental volumes but not structurally altering the global balance in 2025/26.

Fundamentals & Market Drivers

Curve Structure as a Signal

• The Raw Text ICE #11 strip reveals that nearby contracts (May–Oct 2026) cluster around 14.4–14.9 US¢/lb, while out‑years (2027–28) move toward the mid‑16s.
• This structure indicates expectations of slightly higher marginal costs and/or risk premia over time, consistent with ongoing weather risk in Brazil and policy risk in India.
• Absence of steep backwardation suggests that the market does not perceive an immediate supply crunch; instead, it prices in a managed surplus with potential volatility spikes around weather events and policy changes.

Speculative Positioning & Liquidity

• Recent exchange statistics show open interest above 1 million contracts and daily estimated volume around 159,000 contracts for key sessions in March 2026, underscoring high liquidity and participation from funds and commercial hedgers.
• Technical analysis from broker commentary sets key resistance for ICE #11 near 14.30–14.40 US¢/lb and support zones around 13.70–13.80 US¢/lb, aligning closely with the Raw Text’s May 2026 close at 14.37 US¢/lb.
• Price action near these pivot levels suggests that range‑bound trading is likely in the short term unless a fresh fundamental catalyst emerges.

Biofuel & Policy Cross‑Currents

• India’s ethanol blending program aims for 20% blending by 2025–26, but the sugar industry’s share of ethanol feedstock has declined from ~73% to ~28% as maize‑based capacity grows.
• However, with higher projected sucrose availability (35–36.5 Mt) relative to domestic sugar needs (~31 Mt), India is again positioning sugar as a flexible buffer, using both exports and ethanol diversion to stabilize prices for farmers and consumers.
• In Brazil, sugar/ethanol parity and domestic fuel policy continue to influence the sugar mix, but current economics favor a high sugar share (~52%), supporting substantial export flows.

Weather Outlook for Key Cane Regions

Brazil (Center‑South)

• Seasonal outlooks point to persisting dryness in parts of central and southeastern Brazil, though not uniformly as severe as the 2024 peak drought. Soil moisture remains below average in several cane‑heavy states, which could cap yield potential even if rainfall normalizes later in the season.
• Any renewed rainfall deficits or heat waves during critical growth phases would quickly feed into expectations for lower ATR (sugar content) and cane tonnage, potentially justifying higher out‑year ICE #11 premia relative to the already‑priced mild contango.

India

• After prior concerns about patchy monsoons, recent monsoon seasons have been broadly favorable for cane in major belts such as Maharashtra and Karnataka, supporting planting and ratoon crop development for 2025–26.
• Short‑term forecasts do not indicate major nationwide drought risk, but localized flooding or delayed withdrawal of monsoon systems could still affect sucrose accumulation and harvest logistics.

Thailand & Southeast Asia

• Forecasts for Thailand point to near‑normal to slightly above‑normal rainfall in key cane areas, underpinning expectations for a second consecutive year of production recovery in 2025/26.
• However, the region remains sensitive to El Niño/La Niña transitions, which can rapidly shift moisture conditions and affect both cane yields and competition with alternative crops like cassava.

🌐 Global Production & Stocks Snapshot

• Global stocks are expected to edge higher but remain far from the oversupply levels seen in earlier decades, helping explain why ICE #11 is steady in the mid‑teens rather than collapsing.
• Stock rebuilding is geographically uneven: Thailand and India gain stocks and export flexibility, while Brazil remains more exposed to weather‑driven variability in cane output.

Trading Outlook & Recommendations

Market Sentiment (Next 1–3 Months)

• Price action around 14.3–14.6 US¢/lb on the May and July 2026 contracts, together with narrow daily changes in the Raw Text, points to a neutral‑to‑slightly‑bullish sentiment.
• Fundamentals (rising Indian and Thai output, but weather‑risked Brazil) suggest a range‑bound market with upside spikes on weather or policy headlines.

Strategy Ideas by Participant Type

For Cane Growers & Mills

• Hedge progressively into 2026–27 using ICE #11 futures around current levels (~316–345 EUR/t equivalents), especially for high‑cost producers vulnerable to downside.
• Consider incremental hedges in out‑year contracts (2027–28) where the curve offers ~40 EUR/t premium over nearby, locking in margins if input costs (labor, fertilizer, water) stay under control.
• In Brazil and India, optimize cane allocation between sugar and ethanol based on forward parity: when ICE #11 weakens toward support (~13.7 US¢/lb), marginal tonnes may be better directed to ethanol; when prices approach resistance zones, sugar output and hedging should be emphasized.

For Industrial Buyers (Food & Beverage, Refiners)

• Use the current sideways price environment to extend coverage modestly into late‑2026 via futures or physical contracts near 320–330 EUR/t equivalents.
• Maintain some spot market flexibility given expected global surplus; avoid over‑hedging far into 2028 where contango adds cost without a clear shortage signal.
• Explore options‑based hedges (e.g., buying calls above 16.5–17.0 US¢/lb) to protect against weather‑driven spikes while preserving benefit from potential price dips if global surpluses materialize more strongly.

For Speculative Traders & Funds

• The Raw Text and technical levels suggest a mean‑reversion trading range between roughly 13.7 and 14.8 US¢/lb in the near term.
• Short‑term strategies could include selling volatility (e.g., short strangles) around current prices, but with careful risk management around key weather and policy dates (monsoon onset, Brazil crop updates, Indian export announcements).
• Macro funds may consider spread trades (e.g., long sugar vs. short other softs) if global food‑commodity risk premia normalize unevenly across the complex.

🔭 3‑Day Price Outlook (EUR)

Based primarily on the current ICE #11 structure in the Raw Text and recent volatility, and secondarily on external commentary:

• Given very small day‑to‑day changes in the Raw Text (≤0.04 US¢/lb), a narrow three‑day range is the base case.
• Outside this window, weather surprises in Brazil or fresh policy moves in India (export quota announcements or ethanol adjustments) remain the main candidates for a breakout from the mid‑teens cent/lb band.