Raw sugar futures hit their lowest level since December 2020 on expectations that India may allow exports this season amid lower-than-expected ethanol output.
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Raw sugar futures touched the lowest level since December 2020 amid speculation that India could approve exports this season with lower-than-expected volumes diverted for ethanol production.
The most actively-traded contract in New York dropped as much as 1.1% to 14.21 cents a pound on Wednesday, before clawing back to trade slightly higher. Futures have slumped about 25% so far this year, as the market expects a large crop globally and anticipates that lower oil prices will result in less cane being diverted for ethanol production.
India’s ethanol shift eases pressure
India’s sugar manufacturers now expect about 3.4 million tonnes of cane to be used for the biofuel, below an earlier estimate of 5 million tonnes, as oil refiners reduce biofuel purchases. Sugar producers in the South Asian nation are urging the government to allow 2 million tonnes of exports to avert a domestic glut. “Underwhelming” ethanol allocations in India have increased pressure on the Indian government to announce an export quota for the season, Rabobank analysts wrote in a note.
Global surplus builds, funds turn bearish
The market is currently shifting to a surplus for the 2025-26 season and “the overall supply of sugar in the global market seems quite comfortable,” said Andy Duff, a global strategist for sugar markets at Rabobank. Hedge funds are holding a large net-bearish position, he told journalists in Brazil on Wednesday.
Brazil’s booming corn ethanol industry is also contributing to the downturn in prices, steering sugar producers toward increased production of the sweetener.
Analysts call price drop overdone
Still, there are concerns the steep slump may be overdone. The drop earlier Wednesday took the relative strength index briefly into oversold territory, a technical signal that prices may have fallen too far, too fast. The current decline also “seems exaggerated” as the spot price is below the production cost “of virtually all global players,” Bruno Zaneti, a senior risk management consultant at StoneX, wrote in a note.
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Published on October 30, 2025