International sugar prices have surged 19% so far in August, snapping out of a prolonged slump as expectations build that the global surplus will be smaller than previously anticipated.
The rally accelerated on Tuesday, with the most-active New York sugar futures contract settling at 17.48 cents a pound, the highest in 14 months. The move marks a sharp recovery after prices spent an extended period trading between 13 and 14 cents a pound.
The gains spilled over into Brazilian sugar producers. Shares of São Martinho jumped 5.23% on Tuesday, while Jalles Machado surged 8.16%.
In Brazil, sugar prices have risen by about $77 per metric ton (400 reais) over the past 30 to 40 days, according to Willian Hernandes, a partner at FG/A, a consultancy specializing in the sugar and ethanol industry.
El Niño, Smaller Brazilian Crop
A combination of global and domestic factors is driving the rally, Hernandes said. Among them are concerns that El Niño could disrupt weather patterns in India and Thailand, two of Asia’s largest sugar producers.
Brazilian policy may also shift the economics between sugar and ethanol production. A bill approved last week would allow tax cuts or exemptions for the biofuel supply chain, potentially encouraging mills to divert more sugarcane to ethanol and reducing sugar output. The measure, PLP 114/2026, is awaiting presidential approval.
Estimates for sugar production in Brazil’s Center-South, the country’s main cane-growing region, have also been revised lower and now point to an 11% to 12% decline from a year earlier, Hernandes said.
The ethanol market is adding support. In the first week of August, prices for hydrous ethanol — used directly as a vehicle fuel in Brazil — rose 7.24%, while anhydrous ethanol — blended into gasoline — gained 5.32%, according to Cepea, the University of São Paulo’s Center for Advanced Studies in Applied Economics.
“The fundamentals were already all on the table. All that was missing was a trigger — and it was pulled over the past two weeks,” Fábio Meneghin, founder of Veeries, wrote in a LinkedIn post.
Meneghin pointed to lower Brazilian sugar production as mills allocate more cane to ethanol in the 2026/27 season. Center-South sugar output is 11.2% below year-earlier levels, he said.
Weather risks are also mounting elsewhere. Rainfall in Southeast Asia remains below required levels, with delays accumulating in India and Thailand, while heat waves are putting pressure on European sugar beet crops, Meneghin said.
“There’s still uncertainty about global demand, but the market has started pricing in that risk,” he wrote.
Adding to the bullish momentum, speculation that India could cut or eliminate sugar import duties has also influenced prices, Bloomberg reported.
This story was translated from the original Portuguese with the assistance of artificial intelligence and reviewed by The AgriBiz editorial staff.
