RaboResearch Food & Agribusiness Australia/NZ

How much can sugar markets benefit from high oil prices?

·23 min·2 clips

How does a blockade in the Strait of Hormuz and oil prices above $100 a barrel impact the global sugar market?

The episode begins by noting the Strait of Hormuz blockade and the jump in oil prices above $100 a barrel, posing the central question of its impact on sugar. Host Stefan introduces analysts Andy Duff, based in Brazil and responsible for global sugar research, and Charles Hart, based in London and responsible for sugar price forecasting. Andy explains the connection chain: Brazil imports gasoline and diesel, with prices largely set by Petrobras, which has only raised gasoline prices 8% despite the global spike. Ethanol, used as a gasoline substitute and additive in Brazil, is priced relative to gasoline. Higher gasoline prices make ethanol more attractive, which can cause Brazilian mills to shift cane processing from sugar to ethanol, reducing sugar exports from the world's largest exporter. Charles then discusses market reactions, noting sugar futures rose 12% in a month, with the May 2026 contract nearing 15.90 cents. He highlights a record managed money net purchase and significant short covering in the futures market. However, producers also increased short positions by 63,000 lots to hedge, and a stronger dollar prompted new sugar exports from India and Thailand, adding bearish pressure. The conversation turns to Brazil's political and market dynamics, including potential government interventions in an election year and discussions about increasing the mandatory ethanol blend in gasoline. Andy notes the upcoming Brazilian center-south harvest is expected to be large, around 620-640 million tons, but the sugar-ethanol mix remains uncertain. Charles provides updates on other key regions: India's sugar production forecast was revised down due to varietal replacement and excess rainfall, while Thailand's production exceeded 10 million tons, increasing export availability. The episode concludes by looking ahead to the 2026/27 season, noting potential area cuts in Europe and Thailand and a strengthening El Niño forecast, which could bring drier conditions to Asia. Andy also emphasizes the rising costs of inputs like diesel and urea for producers.

As heard by us

Oil's shock moves through sugar prices, producer hedging, export flows, and farm costs.

Oil gives this PlayNext episode its way into a sugar market that looks firm on-screen, then turns more tangled once trade flows and farm costs come into view.

Read the full review in PlayNext →

Why you'd press play

You want to know whether an oil shock can lift sugar futures, or just tempt more sellers into the export market.

Read the full recommendation in PlayNext →

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