Strength in the Brazilian Real Boosts Sugar Prices

July NY world sugar #11 (SBN26) today is up +0.06 (+0.39%), and Aug London ICE white sugar #5 (SWQ26) is up +4.90 (+1.10%).

Sugar prices extended their two-week-long rally today and rose to 1-month highs.  Strength in the Brazilian real is boosting sugar prices as the real (^USDBRL) rallied to a 2.25-year high against the dollar today, discouraging export sales from Brazil’s sugar producers.

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The recent surge in gasoline prices (RBM26) to a 3.75-year high is also bullish for sugar, as higher gasoline prices boost ethanol prices and could persuade the world’s sugar mills to divert more cane crushing toward ethanol production rather than sugar, thereby curbing sugar supplies.

Concerns that future global sugar supplies will shrink are supportive of sugar prices.  Last Friday, Green Pool Commodity Specialists raised their global 2026/27 sugar deficit estimate to -4.30 MMT from -1.66 MMT, citing a shift toward higher ethanol production at the expense of sugar.

The action by Brazil’s sugar mills to boost ethanol production at the expense of sugar is supportive for sugar prices.  Last Thursday, Unica reported that 2026/27 Brazil Center-South sugar production in the first half of April fell -11.9% y/y to 647 MT, with mills cutting the amount of cane crushed for sugar production to 32.9% from 44.7% last year.  Last Tuesday, Conab, in its initial report for the new sugar season, reported that 2026/27 Brazilian sugar output will decline by -0.5% to 43,952 MT, while ethanol output will climb by +7.2% y/y to 29,259 million liters.

Sugar prices also have some support amid concerns over supply disruptions from the ongoing closure of the Strait of Hormuz.  According to Covrig Analytics, the closure of the strait has curbed approximately 6% of the world’s sugar trade, constraining refined sugar output.

Last month, NY sugar fell to a 5.5-year low in the nearest futures contract amid expectations of abundant global supplies and tepid demand.

Sugar prices were also pressured last month when India’s Food Secretary said the government has no plans to ban sugar exports this year, easing concerns that it could divert more sugar to make ethanol following the Iran war disruption to crude oil supplies.  On February 13, India’s government approved an additional 500,000 MT of sugar for export for the 2025/26 season, on top of the 1.5 MMT approved in November.  India introduced a quota system for sugar exports in 2022/23 after late rain reduced production and limited domestic supplies.  Meanwhile, the USDA on Thursday said it expects a 2026/27 sugar surplus in India of 2.5 MMT, the first surplus in two years.  India is the world’s second-largest sugar producer.