Sugar prices moved modestly higher this week, driven almost entirely by the sharp rise in crude oil rather than any change in underlying supply and demand conditions. Gains were partially trimmed following ceasefire talks, underscoring how heavily the recent price movement depends on geopolitical news flow.

The crude oil connection

The rally in Brent crude is the primary driver behind higher sugar prices. Higher oil prices improve ethanol economics, creating an incentive for Brazilian mills to divert cane away from sugar production and toward ethanol. At the same time, the closure of the Strait of Hormuz has placed a more direct constraint on global sugar trade, with estimates suggesting around 6% of global sugar flows have been affected.

Sugar No. 11 (raw) increased to $15.52/lb and Sugar No. 5 (white) rose to $449/mt as of 31 March. Prices remain well below year-ago levels.

Brazil: new season begins under cost pressure

The 2025/26 Center-South campaign has concluded with cane throughput of 603.7 MMT, down 2.2% year on year. Sugar output reached 40.25 MMT, slightly higher than the previous season on a higher allocation of 50.61%.

The 2026/27 season officially started on 1 April, with 18 units already operating in the second half of March. Rain delayed crushing in several regions, with normalisation expected through April. Early estimates point to a crush of 620–625 MMT and sugar output of 40–42 MMT, indicating continued ample supply.

The Middle East conflict is pushing up diesel, fertiliser, and urea costs, squeezing producer margins at the start of the new season. The cost of production for VHP sugar is approaching $0.17/lb FOB Santos, raising the break-even bar at current market prices.

Over 40% of the new crop has already been priced by producers, though this remains below historical levels for this point in the season, reflecting continued caution.

Europe: acreage shifts and surging imports

Planting conditions across northern Europe are broadly dry and favourable. However, structural changes are emerging in the beet belt. In Austria, around 900 of 4,400 contracted beet farmers will not grow beet this season, implying an area reduction of approximately 20%. Oilseed rape, currently priced above €500/tonne, is attracting growers as a rotational alternative.

Input cost pressures are intensifying. Red diesel in the UK is up 60% since the outbreak of the Middle East conflict, and rising gas prices are adding further pressure on processing costs for unhedged operators heading into 2026/27 contract negotiations.

EU sugar imports between October 2025 and January 2026 reached 856,430 mt, up 61% year on year. Over the same period, exports declined 8% to 663,843 mt.

The suspension of Inward Processing Relief (IPR) remains unresolved. The DG Agri Commissioner signalled a decision within weeks, though this has not been agreed across other Commissioners, and any suspension will not apply retroactively.

United States: production losses and a structural demand headwind

Florida cane sugar production was cut to 1.956 MMT following an estimated loss of around 11% of output after the early February freeze. Louisiana is on track for record cane production this season, though a 60-day pause on the Jones Act is creating logistical complications that could limit volumes reaching Gulf Coast refiners.

Season-to-date imports from Mexico reached 143,300 tonnes through January, up around 56% year on year.

A longer-term demand headwind is emerging: GLP-1 medication adoption is now at around 18% of consumers, with a further 34% indicating intent to use. The trend toward smaller, higher-protein meals is structurally pressuring sugar demand. The MAHA movement’s position on added sugar is adding to the headwind, with industry voices noting that reformulation is increasingly seen as a question of timing rather than direction.


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