Sugar market paradox: global prices rise while Vietnam's domestic prices fall

Vietnam’s sugar market is facing a paradox: global prices are rising, but domestic prices have not increased and, in some product lines, have even fallen. With supply remaining ample while domestic consumption weakens, the industry faces continued pressure in the near term unless authorities coordinate action and producers cooperate.

Global prices rise as geopolitical tensions lift costs

World sugar prices increased in March 2026 while the domestic market stayed sluggish. The International Sugar Organization reported that both raw sugar and white sugar futures advanced, supported by geopolitical tensions in the Persian Gulf. The conflict pushed oil prices higher, raising transportation costs. It also made ethanol production more attractive, leading mills in Brazil to shift from sugar output to biofuel, tightening sugar availability.

According to the ISA index, raw sugar averaged 15.00 USD per pound in March 2026, the highest in five months, up from 13.94 USD per pound in February 2026. White sugar, measured by the ISO index, averaged 432.69 USD per ton, also the highest in five months.

Regional prices also increase

Prices in nearby markets rose alongside global movements. In the Philippines, wholesale sugar in Metro Manila increased from 3,354 PHP per 50-kg bag on March 3 to 3,407 PHP by the end of March 2026. In Indonesia, the average sugar price rose from 17,860 IDR per kilogram to 18,122 IDR per kilogram.

Domestic prices face downward pressure from oversupply and illicit trade

Despite higher world prices, Vietnam’s domestic market remains under downward pressure due to oversupply. In addition to domestic production, imports and especially illegal sugar imports continue to enter the market, creating unhealthy competition.

In March, illicit sugar prices increased slightly by 200–400 VND per kilogram due to higher transport costs, but they remained competitive.

Smuggling remains a dominant channel, with traders sometimes avoiding invoices and settling transactions in cash, which disadvantages domestic producers even when product quality and price are competitive, according to Nguyen Van Loc, Chairman of the Vietnam Sugar Association.

Fraud and unclear-origin sugar continue to surface

Authorities have also uncovered cases of commercial fraud. In Tay Ninh in March 2026, authorities found 63 bags of sugar with unclear origin. In Dong Thap, police indicted a large-scale fake sugar production case in which the offender re-bottled sugar from non-origin packaging into packaging of reputable firms for sale.

On social networks and at wholesale markets, sugar labeled as “3 no” (no label, no origin, no expiry) is reportedly sold openly, posing a significant consumer risk and undermining the formal market.

HFCS imports add further pressure on cane sugar demand

Another factor weighing on the domestic sugar industry is rising imports of liquid sugar HFCS. The General Department of Customs reported that HFCS imports reached 19,444 tons in March 2026. Importers are mainly beverage producers, which were previously major consumers of refined sugar.

The shift to HFCS reduces demand for cane sugar and is described as a long-term challenge for the industry.

Outlook: oversupply likely to persist into April and May

Looking ahead to April 2026, Nguyen Van Loc said the market will remain oversupplied, with supply coming not only from domestic production but also from ASEAN imports and smuggling.

Cane-derived sugar consumption is expected to face difficulties, keeping sugar prices at their lowest in three years. Even if conditions in the Middle East change, the domestic market is expected to remain under strain without effective management.

For May 2026, the forecast suggests oversupply will intensify further. Smuggled and origin-unclear sugar is expected to continue dominating the market, while domestic cane sugar will have limited ability to compete if tax evasion and fraud are not curbed.

Industry impact and policy needs

The sugar industry’s difficulties are attributed not only to market dynamics but also to regulatory shortcomings. Without decisive measures to curb smuggling and tighten invoicing and payments, the domestic sugar industry is expected to continue shrinking, affecting millions of sugarcane farmers.

In the current environment, domestic prices remain lower than many regional peers, including Indonesia, the Philippines, and China. Restoring order, curbing smuggling, and creating a fair competitive environment are described as essential for a sustainable path for Vietnam’s sugar sector.