As of the night session on September 8, 2026, the most-traded ZCE sugar futures contract rose, with the SR2701 contract closing at Yuan 5,498/tonne, up Yuan 95/tonne year-on-year, an increase of 1.76%.
The recent sustained upward trend in the ZCE sugar futures contract, coupled with a simultaneous notable rise in ICE raw sugar, has driven a strong linkage between domestic and foreign markets.
The recent upward trend in sugar prices mainly stems from Brazilian mills' increased allocation of sugarcane to ethanol production. As energy use competes for limited crushing resources, the sugar mix ratio has fallen, resulting in lower sugar output from Brazil.
Data from the Brazilian Sugarcane Industry Association (Unica) shows that in the 2025/26 crop year, cumulative sugar production in Brazil's Center-South region reached 10.75 million tonnes by July 1, down 12.38% year-on-year, while the sugar-use ratio in cane crushing dropped sharply from 51.04% in the same period last year to 42.52%. This has directly tightened global raw sugar supply, prompting ICE raw sugar to rebound from its lows. At the same time, news that India has authorized the import of 1 million tonnes of sugar has also lent support to international sugar prices.
Meanwhile, the market holds a particularly strong expectation of an El Niño event this year, fueling expectations of global sugar production cuts that further underpin sugar prices.
On the domestic front, sugar inventories in China have remained relatively high, while sugar sales progress has been sluggish. According to Mysteel's data, as of August 31, cumulative sugar sales in Guangxi reached 6.2013 million tonnes, up 445,000 tonnes year-on-year, with a sales rate of 80.56%, down 8.48 percentage points from the previous year. Refinery sugar inventories stood at 1.4961 million tonnes, an increase of 787,400 tonnes year-on-year.
By August 31, 2026, cumulative sugar sales in Yunnan Province reached 2.4736 million tonnes (compared with 2.0823 million tonnes sold during the same period last year), with a sales rate of 84.18% (versus 86.09% last year). Refinery inventories in the province were 464,700 tonnes (compared with 336,400 tonnes in the same period last year).
Overall, market movement faces pressure. While the rally in foreign markets continues to transmit to domestic prices, subdued domestic trading and high inventory levels have caused spot prices to rise less than futures. The ZCE SR2611 contract is now trading at a premium of over Yuan 100/tonne above spot prices. Futures have already reached a stage-high level, and the market appears fatigued in following the rally, suggesting a likely oscillatory performance in the near term.
In the short term, sugar prices are expected to remain range-bound with a bullish bias. Persistent losses on out-of-quota imports create a solid cost floor, and the reality of Brazil's production shortfall has already been priced in, limiting downside potential. However, high domestic industrial inventories are capping spot price gains, and the narrowing basis is restraining futures upside, increasing the risk of chasing prices above Yuan 5,500/tonne.
Over the medium to long term, a pattern of early strength followed by later weakness is anticipated, with a gradually rising base. If sugar production cuts and export restrictions in India and Thailand materialize in the new crop year, alongside the medium-term trend of a global supply deficit, sugar prices could break through Yuan 5,500/tonne and test the Yuan 5,600-5,800/tonne range.
Nonetheless, the start of the domestic new-crop sugar crushing season (November–December) is expected to introduce periodic supply pressure, so a potential pullback after any rally warrants caution.
Over the long run, the global sugar market is entering a capacity-reduction cycle, and the price center of gravity is likely to shift upward from the Yuan 5,000–5,300/tonne range to Yuan 5,300–5,600 /tonne.
