Why Global Sugar Prices Might See A Rebound

On 8^th Nov, we had released a trade recommendation on sugar arguing that sugar prices are in for a rebound considering there was maximum bearishness.

https://macro-spectrum.com/trade-recommendation/long-sugar

Sugar prices on the time of release were $14.07/lb. Currently the same are at $14.93/lb and we expect further upswing. Further upward momentum can build once it crosses $15.23/lb, the 50 DMA on a weekly closing basis.

We see the case for sugarcane mills in top grower Brazil to divert more cane for Ethanol than sugar considering the low sugar prices currently. In Brazil, millers can choose to make either sugar or biofuel from their cane, depending on what’s more attractive. As raw sugar futures slumped this year, there is a strong possibility that in the coming season mills might consider greater than anticipated ethanol production.

Going into details, sugarcane production in Brazil’s Centre South region is expected to rise to 620 million tons in the 2026-27 season, compared with 607 million tons currently. Still, sugar output is expected to be unchanged from the current crop at 40.8 million tons as mills will likely allocate more cane to making Ethanol.

Sugar prices need to go up to encourage mills in Brazil to produce more sugar during the next crushing season and to get them back in profit. If sugar is wanted, the sugar futures might need to rally above the Ethanol parity level, which actually stands at 16.5 cents.

Even European sugar supplies are set to tighten next year as farmers plan deeper cuts to beet plantings in an effort to halt a slide in prices and protect margins. 

Growers across the EU region expect to shrink the sown area by about 10% for the 2026–27 season. The pullback follows a 10% drop in beet acreage for the current 2025–26 crop, which has already crimped output to a three-year low.

The latest cuts could prop up prices in the European Union and help stem losses at sugar companies facing increased margin pressure. Steady imports from Ukraine and a rebound in Europe’s own output have weighed on the market, driving prices down by roughly a third in the year through to October to €531 ($616) a ton, according to data published by the European Commission.

  

Germany, the EU’s biggest producer, expects acreage to fall more than 8% next season as lower sugar prices erode beet profits. In the UK, the beet area is set to drop about 10% next year after a cut in prices. The decline is squeezing sugar manufacturers across the EU bloc, where high production costs are already putting more factories at risk of closure.

 

Summary: With both Brazil diverting more sugarcane to Ethanol production and EU cutting area sown for beet plantings, we expect global demand supply to turn tight and help Sugar prices move towards $18/lb in medium term.

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