The global sugar market is currently stable, with prices hovering around 14.75 cents per pound, which is considered a rangebound market. This stability, however, is fragile and may not last due to increasing risks. One major factor keeping prices low has been persistent speculator selling, with many betting on lower prices since 2024 when sugar was at 21 cents per pound. This has driven prices down to as low as 13 cents per pound at one point.
Despite the calm surface, underlying concerns are growing. The current market price is below the average cost of production for countries like Brazil, where production expenses range between 15.75 cents and 16.30 cents per pound. Additionally, low ethanol prices have contributed to suppressing sugar prices. These factors suggest that the market's stability is not sustainable in the long term.
Looking ahead, there's a developing expectation of a global sugar deficit for the 2026-2027 period. Initial forecasts by the USDA predicted a surplus, but more recent analyses from StoneX and Covrig Analytics now project a deficit. Covrig Analytics, for instance, revised its 2026-2027 deficit estimate to -3.3 million metric tons (MMT) from an earlier -1 MMT. This shift towards a deficit, particularly driven by smaller Brazilian sugar production, could trigger a rally in sugar prices.
