Sugar Prices Decline Amid Retreating Crude Oil Gains

October NY Sugar #11 (SBV26) slipped 0.60 points, or 3.02%, while London ICE White Sugar #5 (SWV26) fell 15.30 points, or 2.84%.

Sugar prices are slipping as WTI crude oil drops more than 2%, reversing part of Thursday’s 6.7% rally to a three‑month peak. The softer crude market depresses ethanol prices, encouraging mills to shift crush toward sugar rather than biofuel, which adds to supply.

Sugar prices also benefited from Monday’s outlook, after the Thai Sugar Millers Corporation forecast a 17% year‑on‑year drop in 2026/27 Thai output to 10 million metric tonnes.

Thailand ranks as the world’s second‑largest sugar exporter.

Last Wednesday, New York sugar reached a 17‑month peak and London sugar touched a two‑week high amid expectations of a global shortfall. The previous Tuesday, the International Sugar Organization projected a 2026/27 global deficit of 200,000 tonnes, contrasting with a forecast surplus of 1.1 million tonnes for 2025/26.

On August 3, Covrig Analytics shifted its 2026/27 outlook to a deficit of 300,000 tonnes, up from a June surplus forecast of 100,000 tonnes. StoneX, on July 28, lifted its 2026/27 deficit projection to 1.7 million tonnes from a May estimate of 550,000 tonnes, citing Brazil’s shift toward ethanol as crude prices climbed amid US‑Iran tensions. Looking further ahead, Czarnikow on August 14 warned of a 2.9‑million‑tonne deficit for 2027/28, attributing the shortfall to reduced cane and beet plantings and weather‑related disruptions in India, the European Union and Thailand, which could trim global output by 0.7% year‑on‑year to 177 million tonnes.

India’s Meteorological Department noted on Wednesday that cumulative monsoon rainfall (June‑September) was 15% below average as of September 9, a notable improvement from the 42% shortfall recorded on June 30. The country’s Earth Science Ministry cautioned that this season could be the weakest monsoon in eleven years. Monsoon rains, which fall between June and September, are vital for India, the world’s second‑largest sugar producer.

On August 20, India’s Directorate General of Foreign Trade announced it will permit duty‑free imports of up to one million tonnes of raw sugar through October 31. The decision underscores tightening global supplies, given that India is normally a net exporter and last sourced large volumes of foreign sugar in the 2017‑18 season.

Reduced Brazilian output is supportive of sugar prices after Unica reported on August 6 that Center‑South June production fell 26.3% year‑on‑year to 3.903 million tonnes. Brazil remains the world’s leading sugar producer.

Fears that a developing El Niño could bring dry weather to key growing areas are bullish for sugar. A strong El Niño is expected to suppress rainfall in Brazil, India and Thailand—the three largest sugar‑producing regions. On July 8, the U.S. Climate Prediction Center said the current Pacific El Niño could rank among the strongest events in over seven‑and‑a‑half decades.

On April 7, the Indian Sugar and Bio‑energy Manufacturers Association (ISMA) trimmed its 2025/26 production forecast for India to 32 million tonnes, down from 32.4 million tonnes previously. ISMA also expects 2025/26 exports of 800,000 tonnes. India instituted an export quota in 2022/23 after late‑season rains curtailed output and tightened domestic supply. In contrast, the USDA, in its April 30 outlook, projected a 2.5‑million‑tonne surplus for India in 2026/27—the first such surplus in two years.

The International Sugar Organization forecasts a record‑high global sugar harvest for 2025/26, accompanied by a surplus. It projects 2025/26 output at 182 million tonnes—a 3.5% year‑on‑year increase—and a surplus of 1.1 million tonnes, down from a May estimate of 2.2 million tonnes after rebounding from a 3.46‑million‑tonne deficit in 2024/25.

For 2026/27, ISO anticipates a 1% year‑on‑year dip in global production to 180.1 million tonnes, yielding a deficit of 200,000 tonnes, citing possible El Niño‑related impacts on Indian and Thai crops. StoneX, on August 18, lifted its 2026/27 deficit estimate to 1.7 million tonnes from a May figure of 550,000 tonnes, whereas Covrig Analytics trimmed its surplus projection to 100,000 tonnes from a prior 380,000‑tonne forecast.

In its May semi‑annual report, the USDA projected that global sugar production for 2026/27 will decline 6.5% year‑on‑year to 184.9 million tonnes, down from the 186.1 million‑tonne record set in 2025/26. It expects human sugar consumption to rise 0.4% to a record 180.0 million tonnes, while ending stocks should grow 2.0% to 44.4 million tonnes. The USDA’s Foreign Agricultural Service forecasts a 3.0% drop in Brazilian output to 42.5 million tonnes, a 12% rise in Indian production to 33.6 million tonnes—supported by favorable monsoon rains and expanded acreage—and a 15.6% decline in Thai output to 9.5 million tonnes.

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