ICE raw sugar futures are trading at 14.76 US cents per pound, slipping back below the psychologically important 15-cent level as the market digests a global supply picture that has shifted decisively into surplus. The October 2026 contract settled at 14.74 cents with a shallow contango extending to 2029, indicating comfortable near-term availability but slightly firmer forward expectations.
The fundamental driver is production growth. USDA and the International Sugar Organization project global output at approximately 189.3 million tonnes in 2025/26, an increase of 8.3 million tonnes year-over-year. The expansion is concentrated in Brazil, India, and Thailand — the three largest producers — where favorable weather and expanded planted area have delivered significantly larger crops.
Brazil's Center-South region, the world's largest sugar-producing area, concluded the 2025/26 season with a final crush of 611.15 million tonnes of sugarcane, producing 40.43 million tonnes of sugar and 33.7 billion liters of ethanol. The 2026/27 season has started strongly: by mid-April, 19.5 million tonnes of cane had been crushed, up roughly 20% year-over-year, indicating excellent cane availability.
The critical variable for the global sugar balance is Brazil's sugar-ethanol allocation. Early-season data shows that only 33% of crushed cane was directed to sugar in the first half of April 2026, with over two-thirds going to ethanol — a notably ethanol-heavy allocation. By the second half of April, sugar output had reached 1.80 million tonnes (+109% year-over-year), with cumulative sugar production at 2.47 million tonnes (+55% year-over-year). The sugar mix rose to roughly 40%, but ethanol still absorbed about 60% of cane.
This ethanol preference provides an important price floor for global sugar. When sugar prices fall, Brazilian mills shift more cane to ethanol production, reducing sugar output and tightening the market. The ethanol parity level — the sugar price at which mills are indifferent between producing sugar or ethanol — currently sits in the 13-14 cent range. With sugar at 14.76 cents, the market is near this floor, which limits downside.
India's export policy remains the wild card. The government has maintained export restrictions through 2026 to ensure domestic supply and support its ethanol blending program. If India returns to the export market — potentially during the 2026/27 season — it would add significant supply to an already well-supplied global market. If restrictions continue, the market loses a swing supplier and the floor from Brazil ethanol economics becomes more relevant.
Analyst views are divided on direction but generally lean bearish in the near term. The surplus is real and large, and without a major weather event in Brazil or a policy shift in India, prices are expected to trade in the 13-16 cent range for the remainder of 2026. The ethanol floor provides technical support near 13-14 cents, while the 16-17 cent resistance zone reflects the level needed to incentivize Brazilian mills to shift more cane to sugar.
The sugar market is in a structural surplus that creates a favorable procurement environment for food and beverage manufacturers, confectioners, and industrial sugar buyers. Prices near 14.76 cents are within 1-2 cents of the estimated ethanol parity floor, meaning the downside is limited but the upside is also capped by the large global surplus. The strategy is straightforward: cover 50-60% of 2026/27 requirements through physical forward contracts or ICE futures at or below current levels. The remaining 40-50% should be bought in tranches on any dips toward 13.5-14 cents, which would represent exceptional value. The risk to this plan is an Indian export policy surprise — if India announces a significant export quota, prices could break below 14 cents to test the 13-cent level. Conversely, if India restricts exports and Brazil's ethanol mix stays heavy, a rally toward 16 cents is possible. For buyers managing freight-intensive imports, watch Brazil's export logistics closely: the sugar export program is running ahead of last year's pace, and port congestion at Santos could add 30-50 basis points to delivered costs for Q4 2026 arrivals.