China sugar prices to remain soft until Brazil Real plunge impact fades

The core catalyst for this round of white sugar price declines is the sharp depreciation of the Brazilian Real combined with domestic white sugar supply surplus.

After Brazilian President Lula unexpectedly won re-election, the Real plunged about 9% against the U.S. dollar in a single day, the largest one-day drop in nearly a decade, with the magnitude of depreciation comparable to the 2015 "commodity crash" period.

A weaker Real means that ICE raw sugar prices denominated in U.S. dollars "passively decline", while also incentivizing Brazilian sugar mills to accelerate exports to lock in local-currency revenue, exerting significant pressure on international sugar prices. The International Sugar Organization's average white sugar price stood at 19.96 cents/lb as of October 23, down from above 20 cents in mid-October. The decline in ICE raw sugar was transmitted synchronously to the domestic futures market.

Domestic white sugar fundamentals are likewise weak. According to Mysteel and General Administration of Customs data, as of the end of September 2026, China's 2025/26 sugar production season produced a total of 12.95 million tonnes of sugar, up 1,787,800 tonnes or 16.01% year-on-year; industrial sugar inventories stood at 1,292,600 tonnes, up 645,700 tonnes or nearly 100% year-on-year.

On the import side, cumulative sugar imports from January to September 2026 totaled 2,514,400 tonnes, down 640,900 tonnes year-on-year, with September alone importing only 260,000 tonnes, down 288,200 tonnes year-on-year, the reduction in imports provided some positive support but was insufficient to offset the supply pressure from the sharp increase in domestic sugar production. The cumulative sugar sales rate was 90.02%, slowing by 4.18 percentage points year-on-year, indicating slower shipment pace.

The domestic sugar market has long been in a "strong external, weak internal" pattern. This time, the Real's plunge broke the "strong external" logic, with the domestic-international price spread narrowing or even inverting, and the price center rapidly shifting downward.

The sharp decline in domestic white sugar futures dragged spot prices lower. Guangxi sugar groups lowered their quotes on October 27 to the Yuan 5,200–5,230/tonne range. The futures-spot spread narrowed from Yuan -201/tonne (deep discount) on October 13 to Yuan -107/tonne on October 26, with futures falling significantly faster than spot, and pessimism mainly transmitted through the futures market.

In the next 1–2 weeks, the sentiment shock from the Real's depreciation is still fermenting, and ICE raw sugar may further probe the 19 cents/lb or even 18.5 cents/lb range, corresponding to the ZCE sugar main contract potentially testing the Yuan 5,100–5,200/tonne range-the low price zone for the second half of 2026.

However, current prices have partially or even excessively reflected bearish factors: the Real's 9% plunge is an extreme event, and the momentum for further sharp depreciation is weakening; domestic spot prices have fallen far less than futures, and spot-side support cannot be ignored. Short-term domestic sugar prices are expected to run weakly, but weakness does not equal sustained collapse.

Medium term: as the new crushing season begins, white sugar import window changes unfold, and downstream restocking rhythms evolve, sugar prices will seek a new equilibrium range amid fluctuations.