Insight Focus
US sugar supply concerns grow as drought pressures crop prospects. Demand for sugar strengthened, but uncertainty over crop size kept many sellers on the sidelines and limited market activity. Drought conditions worsened across both sugar beet and sugar cane regions, with 77% of each crop now affected by some degree of drought. Meanwhile, a rally in global raw sugar futures supported domestic prices as buyers weighed their 2027 sweetener contracting needs.
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Buyers Seek Coverage as Uncertainty Keeps Sellers on the Sidelines
Activity in the cash sugar market stalled this week as processors and refiners turned their attention to crop updates. Most sellers had withdrawn from the market for 2027, and many were pulling out of the spot market as well. Prices were unchanged but remained nominal.
Demand strengthened. Sellers were eager to return to the market but opted for caution as they awaited a clearer indication of this year’s crop output. Many growers and processors, particularly in the sugar beet sector, slowed or delayed harvest activities in the hope that late-summer rainfall might improve yields.
“I’ve got a lot of customers who are still in my pipeline, and I know that I have more there than I have volume available to sell,” one processor said. “It’s not a price thing. It doesn’t matter if they try to offer us USD 100. Until we figure out that we’re going to have sugar available, I don’t want to get into a situation where we’re oversold.”
Worsening Drought Raises Concerns Over US Sugar Crop Availability
Dryness was a prevailing factor for both sugar beet and sugar cane crops. As of September 1, the USDA said 77% of US sugar beet crops were growing in some degree of drought, up from 75% a week earlier.
Drought conditions also worsened in sugar cane-growing areas, with the USDA saying 77% of crops were growing in drought, up from 75% the previous week. In addition to drought, both Florida and Louisiana continued to manage the impacts of the pasture mealy bug.
Note: Percentage of US sugar beet and sugar cane crop areas affected by D1 (Moderate Drought) or worse conditions.
Source: USDA
The USDA said good-to-excellent conditions in Minnesota as of August 30 were 92% (92% a week earlier, 83% a year earlier), 93% in North Dakota (93%, 84%), 85% in Idaho (81%, 97%), 45% in Michigan (57%, 83%), 71% in Colorado (73%, 66%), and 65% in Wyoming (65%, 86%). Neither Oregon nor Montana reported condition ratings for 2026.
Conditions improved for the Louisiana sugar cane crop after worsening in each of the previous two weeks. As of August 30, the crop was rated 59% good to excellent, up from 50% the week before but sharply below 79% during the same week a year earlier.
Global Sugar Rally Lends Support to Domestic Prices
Adding to the strength in the domestic market was spillover support from the rally in global raw sugar futures. The spot contract in No. 11 futures surged to 16-month highs, gaining 28% since August 1 amid mounting concerns over tightening global supplies.
The domestic corn sweetener market was mixed, with negotiations for 2027 annual contracts underway. Strength in the corn market brought some users to the table as they hoped to lock in rates before prices climbed higher. Others decided to delay contracting, hoping harvest pressure might lower values.
