HEADLINES - Quarterly Market Outlook - AUGUST 2026
World Sugar Market
The 2025/26 global balance is now estimated to be 1.1 mln tonne in surplus, down from 2.2 mln tonnes in May.
Our first estimate of the 2026/27 balance points to a small deficit of 0.2 mln tonnes on the assumption that higher prevailing sugar prices encourage Brazil to heavily favour sugar production.
El Niño poses the strongest threat to our production forecasts in the coming months.
Potential for stock drawdowns means that our trade surplus stands at 1.3 mln tonnes for the period October 2026 to September 2027.
Global consumption is forecast to rise by 0.5% (0.9 mln tonnes) in 2025/26 to 179.6 mln tonnes and by 0.8 mln tonnes in 2026/27 to 180.4 mln tonnes.
Market Price Update
Raw sugar prices have moved up; the average monthly ISA price stood at USD17.4 cents/lb in August.
Speculative funds have increased their long positions on El Niño weather concerns.
The ISO considers the recent price rally premature on fundamentals; however, any deterioration in 2026/27 production could quickly push the global balance into a significant deficit, providing a clear rationale for higher price levels.
The ongoing closure of the Straits of Hormuz continues to influence sugar trade flows in the Persian Gulf with some refineries finding it difficult to source raws and export whites. Meanwhile, high oil prices continue to increase the cost of producing sugar.
Indian domestic prices hit record highs on concerns about tight supplies in the intercrop period; import permits issued.
Persian Gulf truce agreed in June collapses in July, with reversals in energy and fertiliser markets.
Brent crude averaged USD84/barrel in July but closed the month above USD90/barrel.
Urea more than halved from April peak by late June, to around USD450/tonne by end July.
Corn averaged up 6.2% in July, with wheat at a two-year high and cocoa up 27.7%
US Dollar Index firmed to around 121 on a hawkish repricing of Federal Reserve expectations.
INR touched a record low near 97/USD; the BRL and the EUR each gave back around 3%.
ISA Daily Price essentially unchanged over the quarter, but domestic markets diverged sharply.
Indian wholesale prices at their highest since at least 2020 and US refined beet sugar up 7%; Brazil, China, the EU and Mexico all softer.
World Fuel Ethanol Market
World production forecast at 130.1 bln litres in 2026, up 6.0%.
Consumption projected at 127.0 bln litres, up 3.6%, opening a surplus of 3.1 bln litres.
Brazil revised up 1.76 bln litres to 38.3 bln litres as the ethanol-heavy production mix persisted.
India cut 0.75 bln litres to 11.3 bln litres, constrained by blend mandate rather than capacity.
Brazil moves to E32 from August 1st, adding around 1 bln litres a year to domestic demand.
Hydrous-to-gasohol price ratio falls to 61.5% in July, the lowest reading since September 2018.
US imposes 25% tariff on Brazilian ethanol, with a further 12.5% from a separate enquiry.
Grain supplies the marginal litre in Brazil and most of India’s requirement.
Indian sugar diversion to ethanol cut to 1 mln tonne for the coming season, from 2.8 mln tonnes.
Co Product Markets
Molasses
EU molasses prices stay firm on tight beet supply and strong distilling demand, while US values soften on ample Gulf availability.
Global production is broadly comfortable, but EU beet output is set to drop sharply, adding downside risk.
Ethanol dominates demand; feed inclusion stays weak due to cheap grains; fermentation stable
Trade flows remain uneven amid Persian Gulf tensions, India’s slow export rebound, and shifting Asian import patterns.
Global exports ease while EU and US import needs rise.
Cogeneration
Brazil: Q2 2026 bagasse electricity sales flat at 6,339 GWh, with June a historical low for the month.
India: Q2 2026 generation up 4.4% at 828 GWh, but H1 down 4.6% at 5,127 GWh.
Bioplastics
UN Plastics Treaty: INC-5.4 set for March 2027; Chair's negotiating text draws divided reactions.
EU Packaging and Packaging Waste Regulation enters general application on August 12th.
India: Maharashtra approves the first state-level bioplastics policy.
India: Balrampur's sugarcane-to-PLA plant at Kumbhi enters final pre-commissioning.
PHAs and PEF forecast to reach 13% of global bioplastics capacity by 2036.
Alternative Sweeteners
US HFCS output, exports and consumption continue their long structural decline.
Lower corn costs and stronger by‑product credits push 2026 net sweetener costs well below 2025.
Mexican HFCS demand weakens under rising sugar stocks and expanding IEPS taxation.
EU isoglucose remains stagnant, far below post‑quota peaks.
China expands HFCS capacity but faces margin pressure and competition from low‑calorie sweeteners.
Emerging research challenges long‑held assumptions about sugar alcohol safety, with sorbitol showing fructose‑like metabolic pathways.
GLP‑1 users increasingly prefer sugar over artificial sweeteners, driven by sensitivity to off‑notes and clean‑label expectations.
Reformulation pressures persist as sweeteners face growing reputational scrutiny across health, metabolic and sensory dimensions.
The Ingredion–Tate & Lyle merger signals accelerating consolidation toward integrated, end‑to‑end sweetener platforms.
Market momentum is shifting toward lower sweetness, cleaner formulations and diversified sweetener portfolios.
WTO Update
WTO agriculture talks resumed but remain stalled amid deep divisions over India’s MC14 priorities and broader reform tracks.
Members call for more technical, evidence‑based work to break the long‑running impasse.
Chair urges flexibility and trust‑building, requesting a historical briefing on domestic support.
Brazil launches WTO consultations against the US over Section 301 duties on sugar and ethanol.
Dispute highlights rising trade tensions and the fragility of rule‑based enforcement.
RTAs and Sugar Provisions
Asia‑Pacific deepens integration through CPTPP expansion, ACFTA 3.0 and multiple bilateral upgrades.
The EU drives the most active global agenda, advancing deals across Africa, Latin America and Asia.
India accelerates outward engagement with major FTAs entering into force or nearing completion.
The Americas show rising friction, from US–Canada tariffs to stalled USMCA renewal.
Africa consolidates its trade architecture through AfCFTA progress and AGOA extension.
Executive Brief
World Sugar Market
World Balance
Production
Brief(26)04 – The Potential Impact of El Nino on Global Sugar Production
Consumption
Trade
Exporters
Importers
Fundamental Outlook
Brief(26)05 – Trade Balance for Raw and White Sugar
Market Price Update
Futures, Spreads and Arbitrage
Freight
Commodities and Currencies
Domestic Prices
World Fuel Ethanol Market
Overview
Price Dynamics
Carbon Markets
Production
Consumption
Co Product Markets
Molasses
Bagasse Cogeneration
Bioplastics & Biochemicals
Alternative Sweeteners
HFCS / Isoglucose
Intensive Sweeteners
WTO Update
Regional Trade Agreements and Sugar Provisions
World Sugar Balance Estimates