A strong result from Brazil and weaker oil prices have offset El Niño risk to keep sugar under pressure. Oil fell about 4% over the past month as ceasefire hopes were renewed, holding crude below $100 a barrel, and the market has absorbed very large Brazilian output figures from the latest UNICA update. Short-term fundamentals remain bearish, capping upside outside of energy-driven volatility, and funds have increased their net short position.
Brazil is the heart of the story. UNICA reported second-half-April cane crush up 123% year on year, with sugar production up 109% to 1.8 million tonnes, as near-ideal dry weather supported crushing even with mills favouring ethanol. Accumulated sugar output to May 1 reached 2.475 million tonnes, up 55% on the season. Hydrous ethanol parity still favours sugar diversion, though by a smaller margin given weak prices, and the market anticipates a 2026/27 cane crop of 630 to 650 million tonnes. The raw Sugar No.11 price eased to 14.38 cents/lb, while white Sugar No.5 rose to $446/mt.
Policy added uncertainty. A proposed US tariff of 25% on Brazilian goods, including sugar and ethanol, has a July 15 deadline before enforcement and has injected volatility, though some agricultural exemptions are listed. In the US itself, the Sugar No.16 premium over No.11 rose to an all-time high of 21.62 cents/lb, and the USDA sees 2026/27 production at the lowest since 2019/20 on weaker cane and beet output.
Europe offers a more supportive medium-term signal. Hot, dry weather across beet regions and a 7% decline in acreage could pull 2026/27 output as low as 14.8 million tonnes, with UK beet rainfall running 35% to 47% below average. For now, ample Brazilian supply and exports are keeping the global market well covered, with the Q4 supply risk not yet front of mind.
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