The global sugar market is undergoing a period of adjustment, in which fundamentals supporting prices coexist with signs of caution from the physical market. In Brazil’s Center-South region, sugarcane crushing has been recovering from the adverse effects of the weather, but the ATR and sugar mix remain under pressure, limiting production potential.
The sugar estimate for the region was reduced to about 38.5 million metric tons, while the projected global trade surplus fell to just 175,000 metric tons. Even so, FOB premiums in Santos remain modest, suggesting that the supply constraint has not yet fully translated into stronger physical demand.
In this article, we analyze:
Global outlook and supply pressures in the Northern Hemisphere
Deteriorating crop conditions in India and the European Union
In addition to tighter supply in Central-Southern Brazil, the global outlook remains focused on weaker production in key Northern Hemisphere origins. This context has contributed to a reduction in the projected global trade surplus to just 175,000 metric tons, making the market more sensitive to new supply disruptions. In India, the main focus is on rumors of a new round of import quotas granted by the government, which could become a decisive factor, especially during Brazil’s off-season.
The peak of the sugarcane harvest in Brazil’s Center-South region
Crushing, industrial yield (ATR), and sugar content
The most recent data indicate that sugarcane crushing in the Center-South reached nearly 52 million metric tons, reflecting a robust operational pace in the second half of August. Even so, industrial indicators remain under pressure. The ATR remained at 145 kg/t, about 9 kg/t below the five-year average, while the sugar mix stood at close to 52%, down from the 54% observed in the previous harvest, even as sugar maintained a clear price advantage over ethanol.
This performance reinforces the view that the weather continues to negatively impact the recovery of the ATR and the composition of the harvest. The sugar production estimate for the Center-South region was reduced to about 38.5 million metric tons, and the projected global trade surplus fell to just 175,000 metric tons. If the rains persist and continue to hinder the pace of crushing and the recovery of the ATR, further downward revisions may be necessary.
Physical demand and FOB Santos premiums
Despite the tighter supply-demand balance, signals from the physical market do not yet fully confirm a more severe shortage of supply. FOB premiums in Santos remain relatively modest, raising questions about whether production delays and downward revisions to estimates have already translated into lower actual supply for export.
This point is relevant because tighter fundamentals do not necessarily support a strong and sustained rally if demand remains moderate. The recent weakness in FOB premiums suggests that part of the previous rally may have reflected speculative repositioning and the expected tightening of the supply-demand balance rather than a concrete deterioration in physical availability.
March 2027 remains the most favorable point on the curve
The March 2027 contract continues to stand out as the most favorable point on the curve. Sugar availability in Brazil’s Center-South region is likely to be limited during the off-season, while production outlooks in the major producing countries of the Northern Hemisphere remain below average. This combination could keep the market relatively tight throughout the first quarter of 2027, providing support for short-term contracts.
Starting in late March, however, the gradual arrival of the new Brazilian crop should ease concerns about availability and reduce upward pressure on the July 2027 contracts and subsequent maturities, provided there are no further significant supply disruptions. This analysis also helps explain why the current spread structure already appears to factor in part of the expected recovery in supply.
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