Raw and white sugar both spent most of Q1 under surplus pressure before stabilising and recovering into early March as energy markets strengthened. The dominant drag was the widely anticipated 2025/26 global surplus, which kept rallies contained, while the main counterweight was crude oil: rising energy prices improved ethanol parity and raised the probability of cane diversion away from sugar, helping markets recover from mid-February lows.

For raw sugar, the near-term outlook remains bearish into Q2. Brazilian exports from the closing 2025/26 campaign are running well above year-ago levels, and the 2025/26 global surplus remains intact across forecasters. The crude-driven ethanol narrative introduces some upside optionality as the new Brazilian season approaches, but the net allocation effect will depend on whether domestic fuel pricing adjusts to reflect international gains. Indian volumes offer no offsetting tightness, with only 201,000 tonnes shipped against a 2 mmt export quota, and a structural pricing gap versus competing origins keeping shipments well below authorised levels.

Into Q3, the picture is shaped by how the Brazilian season evolves, with peak production and export volumes representing the key bearish pressure point. If crude support fades and mill economics normalise, the surplus narrative is likely to reassert itself. For Q4, the supply picture begins to stabilise as the Brazilian season matures, with El Niño probability rising in H2 2026 as a potential late-season catalyst if a credible monsoon disruption scenario develops.

For white sugar, European delivered prices are expected to remain stable through Q2. EU stocks are at their highest level in at least three seasons, inward processing routes remain open, and a strong euro is sustaining import competitiveness. The Q4 picture is more supportive for European delivered prices, with tighter new-crop availability from confirmed acreage reductions and the lagged effect of lower grower returns on production incentives expected to provide price support into year-end.

Read the full sugar market analysis in the Vesper Sugar H1 2026 Market Outlook. Free download: https://vespertool.com/downloads/