Sugar
Sugar prices depend on Brazil's cane crop, India's policy, ethanol economics and weather. Learn sugar futures, the ethanol link, key producers and what moves prices.
Sugar is produced from sugar cane in tropical regions and from sugar beet in cooler climates. The global benchmark for raw cane sugar is the ICE Sugar No. 11 futures contract. Sugar markets are shaped by Brazil, the largest producer and exporter, India, a major producer whose export policies swing the market, and the link between sugar and ethanol, because Brazilian mills can choose to make either from their cane. Energy prices, the Brazilian real and monsoon rains in Asia all play a role.
The contracts#
| Contract | Exchange | Size | Quote |
|---|---|---|---|
| Sugar No. 11 (raw sugar, world) | ICE US | 112,000 pounds (50 long tons) | Cents per pound; 0.01 cent tick = $11.20 |
| White sugar No. 5 (refined) | ICE Europe (London) | 50 tonnes | Dollars per tonne |
| Sugar No. 16 (US domestic) | ICE US | 112,000 pounds | Reflects protected US market |
A 1 cent move in Sugar No. 11 is $1,120 per contract.
Major producers#
| Country | Role |
|---|---|
| Brazil | Largest producer and exporter; centre south region harvests April to November |
| India | Second largest producer; export policy varies year to year |
| Thailand | Major exporter |
| European Union, Russia | Beet sugar producers |
| China, United States | Large producers and consumers |
The sugar and ethanol link#
Brazilian mills can divert cane to sugar or to ethanol, depending on which pays more. Brazil has a large fleet of flex fuel cars that run on ethanol, gasoline or blends, so ethanol demand responds to fuel prices.
What moves sugar prices#
| Driver | Example |
|---|---|
| Brazilian weather | Drought or frost in centre south Brazil cuts cane yields |
| Brazilian real | A weaker real encourages exports, often weighing on prices. See Currency Pairs: Majors, Minors and Exotics |
| Indian monsoon | Rainfall drives Indian cane output |
| Indian export policy | Export quotas, bans or subsidies shift world supply |
| Ethanol economics | Oil prices and Brazilian fuel policy |
| Thai production | Weather in Thailand affects exports to Asia |
| Demand | Steady global growth; health policies such as sugar taxes reduce demand in some countries |
Seasonality#
Brazil's centre south harvest runs from about April to November, with industry data (UNICA reports) released twice a month showing cane crushed, the sugar mix and ethanol output. India's season runs from October to September. See Seasonality in Commodities.
Price history#
- 1974 and 1980: sugar spiked to record highs during supply shortages.
- 1985: prices fell to around 3 cents a pound amid a glut.
- 2011: prices rose above 35 cents a pound after poor Brazilian crops.
- 2023: sugar reached its highest levels in more than a decade as India restricted exports and weather hit production.
Trading sugar#
- Outright futures and options on ICE.
- White premium: the spread between refined (London No. 5) and raw (No. 11) sugar, reflecting refining margins.
- Calendar spreads reflecting seasonal supply. See Calendar Spreads in Futures.
- Cross market views with crude oil and the Brazilian real.
Risks#
- Policy shocks, especially from India and Brazil.
- Weather in Brazil, India and Thailand.
- Currency volatility in emerging markets.
- High volatility relative to many grains.
Frequently asked questions#
What is Sugar No. 11?#
The ICE futures contract for raw cane sugar, the global benchmark for world sugar prices.
How does oil affect sugar prices?#
Brazilian mills can make ethanol instead of sugar, so higher oil and fuel prices make ethanol more attractive, reducing sugar output.
Who produces the most sugar?#
Brazil is the largest producer and exporter, followed by India; Thailand is another major exporter.
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Mentioned in
- Weather and Agricultural DataData and Alternative Data