On September 8th, sugar-related concept stocks in China's A-share market performed brilliantly, and domestic white sugar futures continued to rise, attracting market attention.
A professional interviewed by reporters believes that the reduction in EU sugar beet production caused by El Niño and the expectation of reduced production in India and Thailand are the core driving forces behind this round of market trends.
Joint Rise of Sugar-related Stocks and Futures
On September 8th, sugar-related concept stocks in China's A-share market surged across the board. On the same day, sugar industry stocks such as COFCO Sugar and ST Guangtang rose by the daily limit; the artificial sweetener concept sector also saw a sharp rise, with Sanyuan Bio surging over 14%, and Huakang Co., Ltd., COFCO Technology, Hongmian Co., Ltd., and Baolingbao all hitting the daily limit.
In the futures market, the main contract of domestic white sugar futures continued to rise, hitting a new high in the past two months during intraday trading, and the contract has risen for multiple consecutive trading days.
El Niño-induced decline in sugar beet production in the EU and expectations of reduced output in India and Thailand are the core driving forces behind this market trend. Subsequently, India's shift in its import and export policies disrupted the balance of global sugar trade, further amplifying the rise in international sugar prices," said Niu Zhe, a white sugar analyst at Zhuochuang Information. Meanwhile, as expectations of a supply-demand gap continue to ferment, funds closed out short positions en masse and shifted to long positions, amplifying the elasticity of short-term price gains.
Zhang Xiaojin, Director of the Resource Products Research Department at Everbright Futures Research Institute, told reporters that the core factors driving the recent strength in white sugar futures prices are the rise in raw sugar futures prices and the impact of El Niño weather on expectations of future output. Market sentiment regarding concerns about agricultural product supply has intensified, and with sugar prices currently at a low level with a high safety margin, this variety has attracted market attention.
We should rationally view the actual impacts of the El Niño phenomenon," Zhang Xiaojin pointed out. The impacts of El Niño usually concentrate in autumn and winter. In Brazil, East and South China, temperatures are likely to be higher, while Southeast Asia is more prone to drought. The specific impact lies in the severity of meteorological disasters, namely the magnitude and duration of the temperature rise. If the duration is short, the impact will usually weaken.
Domestic inventory pressure persists
Zhang Xiaojin introduced that the Southern Hemisphere is currently in the sugarcane harvesting period, and the dry weather is conducive to mechanized harvesting operations. At present, the institution maintains a bumper harvest expectation for Brazil in the 2026/2027 crushing season. The sugarcane production forecasts given by major institutions are all higher than 700 million tons, and the sugar production forecast is about 42.9 million tons. The estimated production in central and southern Brazil is between 39 million and 39.5 million tons, still at a historically high output level, which has become the biggest pressure for the rise of sugar prices in the future.
In the Northern Hemisphere, especially Thailand and India, the estimated output for the upcoming 2026/2027 crushing season is expected to decline. Both regions have experienced varying degrees of drought from June to August (but in Thailand, the reduction is mainly due to the shrinking planting area).
Niu Zhe stated that super El Niño has varying impacts on the world's major sugarcane-producing regions. Among them, its impact on Brazil is likely to be limited, while there are strong expectations of reduced production in Thailand, India and the European Union, especially the latter. As the largest sugar beet producer in the EU, France recorded the most significant drop in yield per unit area. Some fields have shown leaf withering, and coupled with the rising pressure from diseases, the risk of yield loss has been further amplified.
Zhang Xiaojin told reporters that domestically, data on sugar production and sales in Guangxi in August showed that 720,000 tons of sugar were sold in a single month, an increase of 460,000 tons year-on-year, far exceeding the level of the same period in many years; as of the end of August, the inventory was 1.5 million tons, an increase of 790,000 tons year-on-year. In Yunnan, 440,000 tons of sugar were sold in a single month in August, an increase of 310,000 tons year-on-year, also hitting a new high for the same period in many years. As of the end of August, the industrial inventory was about 470,000 tons, which means that in the next two and a half months or so, the two provinces still have about 2 million tons of inventory to be digested.
After mid-September, sugar factories in Inner Mongolia and Xinjiang will start crushing beets one after another, which will continue to replenish domestic inventories and keep the overall domestic supply under high pressure." Niu Zhe said that for the domestic market to truly follow the rise in the external market, two conditions are needed first: the continuous and rapid depletion of industrial inventories in producing areas, bringing inventories back to the normal level of previous years year-on-year, and the emergence of a substantial risk of production reduction in the new domestic crushing season. However, judging from the current industrial inventories and the growth status of sugarcane in Guangxi and Yunnan, it is difficult to meet the above conditions, and the upside potential of the domestic market will be significantly lower than that of international sugar prices.
The medium-to-long-term price center of gravity is likely to move up
Niu Zhe stated that judging from the market trend in September, precipitation in major producing areas of India and Thailand has been below average, and the risk of sugarcane production reduction continues to rise. Weather premiums will continue to support international sugar prices, but if Brazil's crushing progress exceeds expectations, sugar prices may experience a phasic回调. On the domestic front, the start of food processing stockpiling ahead of the Mid-Autumn Festival and National Day in September has driven a phasic improvement in demand, but high inventories continue to suppress sugar prices. It is expected that the domestic spot price of white sugar may rise first and then fall.
Niu Zhe believes that the center of sugar prices is likely to move gradually upward in 2027. The global sugar market supply will shift from surplus to a tight balance or a slight deficit. If the production reduction scales in India, the EU and Thailand expand, the external market may rise sharply; if crude oil plummets and Brazil significantly raises the sugar-to-ethanol ratio, the increase in the external market may narrow. For the 2026/2027 crushing season, China's estimated sugar output is 13.1 million tons, consumption is 15.5 million tons, and imports are projected to be 4 million tons. Domestic sugar inventories will be gradually reduced from high levels, but the carry-over inventory pressure will remain in the first half of the year, and the market may continue to consolidate. In the second half of the year, entering the peak consumption season, and the market will start to price in the weather expectations for the new crushing season, pushing up the price center. The new crushing season starts in November, and the listing of new sugar will bring supply growth.
Liu Xia, an analyst in the sugar industry at Shanghai Steel Union, believes that in the short term, white sugar prices will fluctuate on the strong side. The continuous losses from imports beyond the quota have formed a hard cost floor, Brazil's production reduction fact has been priced in, and there is limited room for a decline. However, the high level of industrial inventories has suppressed the follow-up rise in spot goods, and the weakening of the basis has restricted the gains of futures, increasing the risk of chasing high prices. In the long run, the price will peak first and then decline, with the bottom gradually rising.
If India and Thailand's production cuts and export restrictions in the new crushing season continue to be fulfilled, coupled with the medium-term trend of global supply and demand turning into a shortage, sugar prices are expected to break through 5,500 RMB per ton and hit 5,600 RMB to 5,800 RMB per ton," Liu Xia said. However, the commencement of the domestic new crushing season (November to December) will bring phased supply pressure, and risks of a pullback after a surge need to be guarded against. The global sugar market has long entered a capacity reduction cycle, and the price benchmark is expected to rise from 5,000 RMB to 5,300 RMB per ton to 5,300 RMB to 5,600 RMB per ton.
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