Sugar Cane Market Tightens as Supply Risks Mount in Key Origins

ICE raw sugar prices are grinding higher as the market starts to price in a tighter global balance for 2026/27, driven by weather issues in India and Thailand and stronger ethanol incentives in Brazil. Forward curves remain in mild backwardation but have lifted across the strip, reflecting rising concern that projected surpluses for 2025/26 could flip into deficits next season. Despite the recent rally, absolute price levels remain well below the 2023–early 2024 highs, keeping physical demand largely intact while leaving room for further upside if crop losses deepen. Market attention is firmly on how India’s weak monsoon and Brazil’s crush/ethanol mix will translate into export availability over the next 6–12 months. Differing deficit estimates from key analysts underline how uncertain the production outlook still is.

Prices

The ICE Sugar No. 11 curve moved higher on September 10, 2026, with the front months posting gains of around 1.3–1.8% on the day. October 2026 settled at 18.73 USc/lb (previous day 18.40), while March 2027 closed at 19.75 USc/lb, highlighting a firmer nearby structure and moderate backwardation further out.

All listed contracts from October 2026 through July 2029 finished the session in positive territory, with settlements gradually easing from about 18.7–19.8 USc/lb in 2026/27 towards roughly 17.1–17.9 USc/lb by mid‑2028/29. This still-elevated forward curve mirrors expectations of tighter supply in the next two seasons, even if some normalization is priced in after 2027/28.

*Approximate conversion assuming ~22–23 USc/lb ≈ 520–540 USD/mt and EUR/USD near parity.

Complementing futures, Brazilian refined sugar (ICUMSA 45) FOB São Paulo is currently offered around 0.53 EUR/kg, up slightly from roughly 0.52 EUR/kg in mid‑October 2024. This points to a modest but persistent uptrend in physical quotations in EUR terms, consistent with the firmer ICE board and higher white sugar benchmarks reported by the International Sugar Organization.

Supply & Demand

The global sugar balance is shifting from a small surplus into potential deficit. For 2025/26, expectations still point to a surplus of about 1.1 million tonnes. However, for 2026/27 the International Sugar Organization projects a global deficit of roughly 200,000 tonnes, while some private analysts (e.g. Green Pool) warn of a much sharper shortfall of up to 3.2 million tonnes.

The wide range of projections underscores how uncertain the production outlook is, especially given weather volatility and the sensitivity of cane yields and sugar recovery to late-season conditions. Against this backdrop, any additional weather shock in a major origin could quickly tighten the balance and support further price appreciation from current levels.

Key origins

• India: The 2026 southwest monsoon has been historically weak, running around 14–15% below normal nationwide, with a notable shortfall persisting into early September. Sugarcane areas face moisture stress, and the government has effectively halted sugar exports, while for the first time in years authorising duty-free raw sugar imports of up to 1 million tonnes to stabilise domestic supply.
• Brazil: Brazil’s cane availability is nominally high at nearly 650 million tonnes, but weather-related harvest disruptions and logistical issues are limiting the effective flow of sugar to the export market. Elevated crude prices – Brent recently above 90 USD/bbl – have encouraged mills to divert more cane to ethanol, tightening the sugar mix and reinforcing the bullish tone in New York.
• Thailand: Below-average rainfall and a structural shift of farmers towards more profitable cassava are weighing heavily on Thailand’s 2026/27 cane area and yield prospects, reducing exportable sugar volumes just as Asian demand remains robust.

Weather & Crop Outlook

In India, cumulative monsoon rainfall from June 1 to September 9, 2026 reached about 648 mm versus a normal level near 761 mm, reflecting a deficit close to 15%. The shortfall has deepened in early September, and forecasters expect below-normal precipitation in the final phase of the monsoon. This raises risks for late-planted cane and may curb sucrose accumulation, even if irrigated areas are somewhat insulated.

In Brazil’s Centre-South, recent dry windows have favoured crushing, but earlier weather disruptions and heightened El Niño variability have already introduced noise into yield expectations. Combined with high ethanol parity supported by firm oil prices, mills are likely to continue favouring biofuel production at the margin, constraining sugar output.

Thailand’s outlook remains clouded by underwhelming seasonal rainfall and higher opportunity costs for farmers. Without a clear improvement in moisture and incentives, the 2026/27 cane crop is likely to remain significantly below earlier decade averages, further tightening the Asian export pool.

Fundamentals & Market Structure

Futures spreads along the ICE No. 11 curve show modest backwardation from March 2027 onward, signalling that the market is willing to pay a premium for nearby supply but still expects some easing later in the decade. Volumes are concentrated in the front 2026/27 contracts, underscoring that the main risk window sits in the next 12–18 months.

On the fundamental side, the combination of a shrinking global surplus, restricted Indian exports, weather-related uncertainty in Brazil and Thailand, and firm energy markets suggests that the downside for raw sugar is limited in the near term. At the same time, prices have not yet reached levels that aggressively ration demand, which leaves potential for further price spikes if production disappoints or logistics are disrupted.

Trading Outlook (Next 1–3 Months)

• Importers / industrial users: Consider advancing coverage for Q4 2026–Q2 2027 needs while ICE No. 11 remains below 20 USc/lb and Brazilian refined offers hover around 0.53 EUR/kg FOB. Focus on flexible volumes and optional origins given uncertainty around India and Thailand.
• Producers (Brazil, Thailand, other exporters): Current forward prices out to 2027/28 offer attractive hedging levels versus historical costs. Gradual, layered selling on rallies above the recent band is advisable, while retaining some upside exposure in case deficits materialise at the higher end of forecasts.
• Speculative participants: The risk-reward favours a cautiously bullish bias, particularly on weather setbacks or further signs of Indian import demand. However, the market has already priced in some tightness; disciplined risk management and attention to macro/FX swings are key.

3-Day Price Indication (Directional)

• ICE No. 11 (raw sugar): Slightly bullish bias in the 18.5–20.0 USc/lb range, supported by deficit narratives and firm energy prices.
• Brazil refined sugar FOB São Paulo (EUR): Stable to mildly firmer around 0.53–0.55 EUR/kg, tracking ICE and white sugar benchmarks.
• EU white sugar (EUR/mt): Stable with an upward risk bias, mirroring tighter global raw supply and reduced Asian export competition.