Raw and white sugar futures traded on ICE rallied to their highest points in more than a year on Thursday amid mounting market concern over weather-driven supply risks and a potential shift in demand patterns from India.
Raw sugar firmed by 0.7% to 17.68 cents per pound at 1308 GMT after earlier in the session touching 17.99 cents, the intraday high that represented the strongest level for the contract in over a year. Market participants pointed to El Nino weather patterns as a factor that could reduce production in key growing regions, adding to supply apprehension.
Traders also observed that record domestic sugar prices in India - the world’s second-largest sugar producer - might prompt New Delhi to source supplies from international markets. The Indian government has issued a measure requiring bulk consumers that use more than 10 metric tons of sugar per month to hold no more than a 15-day supply, a policy intended to ease elevated domestic prices but one that market participants say could accelerate imports.
Adding to the supply-side narrative, Brazil’s national crop agency Conab said on Thursday that the country’s sugar production is projected to fall by 2.9% to 42.9 million tons in the 2026/27 season. The Conab projection was cited by traders as a factor supporting stronger sugar prices.
White sugar futures outperformed on the session as well, climbing 1.6% to $550.70 per ton after earlier reaching $564.40 per ton - the highest level for white sugar since March 2025.
Key points
- Raw sugar rose to 17.68 cents per pound at 1308 GMT after an earlier intraday peak of 17.99 cents, a one-year high.
- White sugar hit $564.40 per ton intraday and settled up 1.6% at $550.70 per ton, marking its strongest level since March 2025.
- Market drivers include concerns about El Nino-related production cuts and the prospect of India moving into the global import market amid record domestic prices.
Risks and uncertainties
- El Nino weather patterns could lead to production shortfalls in sugar-growing regions, affecting supply and price dynamics.
- India’s potential entry into the import market, prompted by high domestic prices and government inventory limits for large buyers, represents demand-side uncertainty.
- Projected lower output in Brazil - a 2.9% decline to 42.9 million tons in 2026/27 per Conab - introduces an additional supply risk.
Prices and policy moves described above are the primary forces cited by traders for the recent advance in sugar futures. Market participants remain attentive to weather developments and any formal announcements regarding Indian imports or adjustments to domestic inventory rules, which could influence near-term price direction.