Sugar prices surged today, with July NY world sugar #11 rising 2.40% to a 3.5-week high, as concerns mount that increasing gasoline prices will lead sugar mills to prioritize ethanol production over sugar. Green Pool Commodity Specialists have adjusted their global sugar deficit estimate for 2026/27 to -4.3 million metric tons (MMT), up from -1.66 MMT, driven by this shift in production priorities. The rise in gasoline prices, which hit a 3.75-year high, is further exacerbating the situation by making ethanol production more attractive for mills.
The implications for the sugar market are significant. Brazil’s sugar production is projected to decline by 0.5% to 43.95 MMT for the 2026/27 season, while ethanol output is expected to climb 7.2% year-on-year. This shift is likely to tighten global sugar supplies, as evidenced by recent cuts in surplus estimates from various analysts, signaling a potential bullish trend for sugar prices.
Market professionals should consider the tightening supply dynamics and the impact of rising ethanol production on sugar prices, which could lead to increased volatility in the sugar market.
Source: nasdaq.com