Raw sugar prices extended their climb over the past week. The NY11 July contract closed at a one-month high of 15.37 USc/lb on 5 May, supported by spillover from stronger oil markets and a firmer Brazilian real, which has appreciated against the US dollar in a move widely seen as discouraging sugar exports.

White sugar also moved higher. The LDN No.5 contract climbed 4.7% over the week to levels above $450/mt.

Brazil shifts toward ethanol

UNICA figures for the first half of April pointed to weaker sugar output in favour of ethanol. Crush volumes in Center-South Brazil reached 19.96 million tonnes, up 19.7% year on year, but sugar production fell 12% to 647,000 tonnes. Ethanol output rose 33% to 1.23 billion litres, with mills allocating 67% of cane to ethanol against 55.2% in the same period last year.

For the 2026/27 season, Center-South estimates point to a cane crush of 629 to 630 million tonnes and total sugar output of 40 million tonnes, with the sugar mix easing to 48%. Total ethanol output is projected at 38 billion litres including corn ethanol.

Hydrous ethanol parity continues to favour ethanol diversion. President Lula has announced an increase in the mandatory ethanol blend in gasoline from 30% to 32%, alongside an increase in the biodiesel blend from 15% to 16%, which is expected to sustain ethanol demand.

Petrobras has raised some domestic fuel prices, including a 19% increase for natural gas and 18% for aviation fuel. Gasoline price hikes may follow, although the company’s CEO has signalled efforts to reduce direct impacts on consumers ahead of the October election.

Funds reduce short position

The latest CFTC data showed managed money buying 2,215 lots in the week ending 28 April, leaving the net short position at 187,345 lots, far less bearish than a month ago. Commercials made substantial sales in both New York and London over the same period, indicating an increase in hedging at recent levels.

EU regulatory shift

EU member states voted to approve the European Commission’s proposal to suspend the inward processing procedure for 12 months starting 27 May, with a review after the first six months. Imports of white sugar will be exempt from the suspension.

The latest European Commission Sugar Market Observatory report estimated 2025/26 EU output at 16.6 million tonnes and consumption at 13.8 million tonnes.

Beet sowing in the Netherlands has been completed on schedule, with less reseeding required than initially feared. Poland faced adverse weather conditions that may require some reseeding, and Austrian plantings were reported 10% lower than last season. Ukraine’s Ministry of Economy forecast a beet sowing area of 197,200 hectares this year, the lowest on record, after three successive frost waves and heavy dust storms compromised planting.

Outlook

Short-term physical supply remains ample, which means downside pressure could emerge if energy markets shift. There is no credible ceasefire in place and disruption to transit through the Strait of Hormuz continues to lend support to fuel markets. With sowings largely completed in Europe, reduced acreage is now absorbed and yields will determine final supply. Weather conditions in April aided sowing progress, but widespread dryness could become problematic without persistent relief.

For the full sugar market analysis, visit: https://app.vespertool.com/market-analysis/2964?commodity=sugar