Sweet Spot or Spoiler? Why Sugar’s Stability Might Be Deceptive

Prices for raw sugar have been hovering in a relatively calm band trading between 17 and 19 cents per pound. On the surface, that might look like a stable equilibrium. But dig a little deeper, and the picture gets stickier. Weather extremes, policy shifts, and energy market overlaps are all quietly churning beneath the surface, and the next few quarters could be anything but boring.

Global Supply: One Step Forward, Two Steps Back

The past two years weren’t kind to the world’s sugar giants. Brazil and India combined, they normally account for over half the world’s output have both struggled under the weight of erratic weather. From droughts to floods, it’s been a parade of poor harvests. Those shortfalls were partly offset by a surprisingly strong crop from Thailand, which saw a 14% year-on-year jump in the 2024/25 cycle. It was the second-largest sugar export push in the world—and it came just in time.

But relief may be short-lived. Better weather forecasts are now pointing toward a dramatic production rebound in both India and Brazil. Brazil is expected to pump out over 46 million metric tons (MMT), a 4% jump, thanks to improving conditions in its key growing zones. India, meanwhile, could surge back with a 25% increase, topping 35 MMT. That number would mark a full return to form, driven by an excellent monsoon season.

Global Sugar Production by Country

Demand: The Invisible Drag

It’s hard to ignore the headlines. From New York to New Delhi, sugar’s public image has soured. Health campaigns, sugar taxes, and shifting consumer preferences in Western economies are all playing a role. Add to that a broader economic slowdown across multiple regions, and you start to wonder: are we entering an era of demand stagnation?

We’re not ready to call it a trend just yet. But even the possibility of softening global appetite introduces another layer of complexity into the price outlook.

The Crude Factor

Here’s the wild card: crude oil. Each year, Brazilian mills make a choice, turn sugarcane into sweetener or ethanol. That decision depends heavily on oil prices. And right now, crude markets are flashing signs of surplus.

If oil prices weaken further and I think they might Brazilian producers could start diverting more cane away from fuel and toward food-grade sugar. That could exacerbate the current supply situation, flooding the market just as global consumption is showing signs of hesitation.

Combine that with the already projected 4 MMT surplus for the upcoming marketing year, and the balance starts to tilt.

Conclusion: Sugar’s Upside Looks Capped

Right now, sugar prices appear range-bound. But with production roaring back, demand potentially faltering, and a possible shift in Brazil’s ethanol economics, the odds favor downside pressure. That’s not to say sugar will collapse. But rallies? We see those as chances to fade.

We’ll be watching closely over the next few months. Especially crude oil, which could quietly become the fulcrum that shifts this entire market.

Sweet Spot or Spoiler? Why Sugar’s Stability Might Be Deceptive

Prices for raw sugar have been hovering in a relatively calm band trading between 17 and 19 cents per pound. On the surface, that might look like a stable equilibrium. But dig a little deeper, and the picture gets stickier. Weather extremes, policy shifts, and energy market overlaps are all quietly churning beneath the surface, and the next few quarters could be anything but boring.

Global Supply: One Step Forward, Two Steps Back

The past two years weren’t kind to the world’s sugar giants. Brazil and India combined, they normally account for over half the world’s output have both struggled under the weight of erratic weather. From droughts to floods, it’s been a parade of poor harvests. Those shortfalls were partly offset by a surprisingly strong crop from Thailand, which saw a 14% year-on-year jump in the 2024/25 cycle. It was the second-largest sugar export push in the world—and it came just in time.

But relief may be short-lived. Better weather forecasts are now pointing toward a dramatic production rebound in both India and Brazil. Brazil is expected to pump out over 46 million metric tons (MMT), a 4% jump, thanks to improving conditions in its key growing zones. India, meanwhile, could surge back with a 25% increase, topping 35 MMT. That number would mark a full return to form, driven by an excellent monsoon season.

Global Sugar Production by Country

Demand: The Invisible Drag

It’s hard to ignore the headlines. From New York to New Delhi, sugar’s public image has soured. Health campaigns, sugar taxes, and shifting consumer preferences in Western economies are all playing a role. Add to that a broader economic slowdown across multiple regions, and you start to wonder: are we entering an era of demand stagnation?

We’re not ready to call it a trend just yet. But even the possibility of softening global appetite introduces another layer of complexity into the price outlook.

The Crude Factor

Here’s the wild card: crude oil. Each year, Brazilian mills make a choice, turn sugarcane into sweetener or ethanol. That decision depends heavily on oil prices. And right now, crude markets are flashing signs of surplus.

If oil prices weaken further and I think they might Brazilian producers could start diverting more cane away from fuel and toward food-grade sugar. That could exacerbate the current supply situation, flooding the market just as global consumption is showing signs of hesitation.

Combine that with the already projected 4 MMT surplus for the upcoming marketing year, and the balance starts to tilt.

Conclusion: Sugar’s Upside Looks Capped

Right now, sugar prices appear range-bound. But with production roaring back, demand potentially faltering, and a possible shift in Brazil’s ethanol economics, the odds favor downside pressure. That’s not to say sugar will collapse. But rallies? We see those as chances to fade.

We’ll be watching closely over the next few months. Especially crude oil, which could quietly become the fulcrum that shifts this entire market.