(Bloomberg) — Sugar futures in New York were headed for the biggest weekly gain since May 2025 amid tight supplies in India and volatility fueled by demand uncertainty, physical supplies and the prospect of Brazilian mills directing more cane to produce the sweetener.
The most-active raw sugar contract rose as much as 1.2% in mid-morning trading after falling as much as 2.1% to 17.16 cents a pound. That’s after rising above 18 cents on Thursday.
“Just as 13 cents per pound was an exaggeration in the low area, perhaps 17 or 18 cents a pound is an exaggeration in the high areas,” Carlos Murilo de Mello, head of the sugar desk in the Americas at Hedgepoint Global, said during a presentation this week.
Mello noted mills are set to direct more cane to sugar production “given sugar’s current advantage over ethanol in Brazil’s Center-South region,” but that comes as buyers refrain from placing orders amid the war in Iran.
“Demand is weak,” Mello said citing Brazil’s sugar ship schedules compared with last year. “Mills are producing more sugar but are shipping less. Gulf refineries cannot buy because of problems in the Strait of Hormuz.”
The market’s struggle to hold gains in Friday’s early session signaled that the news of India allowing imports may have already been priced in, according to a StoneX note.
Still, the most-active contract in New York was headed for about a 6% weekly increase.
The Indian government said it would allow raw sugar imports of up to 1 million tons through Oct. 31 tax free, marking a rare step by the world’s second-biggest sugar producer. The South Asian nation last imported the sweetener for domestic use almost a decade ago but needs to bolster supplies ahead of the festival season, when demand usually peaks.
The country allowed exports earlier this year despite a smaller-than-expected crop, leaving inventories unusually low and sending domestic prices to all-time highs.
“I think the Indian decision has caught some by surprise because the market was like 50/50 whether it would happen,” said Michael McDougall, an analyst with McDougall Global View.
McDougall added that initial projections on the amount of sugar India could import in a short period were not substantial, but that view may be changing.
“Where there is demand, the trade houses can be very flexible,” he said, estimating there are 390,000 tons of raw sugar already heading to India’s standalone refineries, and cargoes en route could be diverted, helping replenish local stockpiles.
(Corrects fourth paragraph to show more cane being directed to sugar production.)
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