October New York sugar #11 (SBV26) rose +0.47 (+3.25%), while October London ICE white sugar #5 (SWV26) gained +16.70 (+3.67%) today. Sugar markets are experiencing steep upward movement, fueled by record-high crude oil prices that have prompted significant short selling reversal in sugar futures. WTI crude (CLQ26) soared above +3% at a monthly peak, boosting ethanol demand and incentivizing sugar mills to expand ethanol production over cane crushing, thereby tightening global sugar availability.
Thursday saw prices drop to three-week lows amid improved Indian monsoon conditions. India’s Meteorological Department reported cumulative rainfall through July 17 at 24% below average—markedly better than June 30’s 42% deficit.
Long-term positions in London ICE sugar by institutional funds pose risks of exacerbating price declines. Recent Commitment of Traders (COT) data revealed a record surge in net long positions, increasing by +10,368 during the week ending July 7 to a total of 58,131 in London white sugar.
Over the past three weeks, NY sugar achieved a two-month nearest-futures high, and London sugar reached a 10.25-month peak. Prices have risen due to concerns over weaker Indian monsoons potentially reducing yields and hindering sugarcane harvests—the world’s second-largest producer. India’s Earth Science Ministry has indicated this year’s monsoon could be the weakest in a decade, impacting the June-September season critical for production.
The emergence of a strong El Niño pattern threatens global supply further. The US Climate Prediction Center warns this may be one of the strongest on record in 75 years. It could suppress rainfall in Brazil, India, and Thailand—key sugar producers. India’s weather service recently reduced its monsoon rainfall forecast to 90% of historical averages, down from 92% projected in April.
Bullish factors include Unica’s June 22 report showing Brazil’s 2026/27 Center-South sugar production fell -2.0% YoY to 6.838 MMT as ethanol production expanded. Brazilian mills reduced sugar utilization to 41.42% from 50.09%, while ethanol processing rose to 58.38%. Similarly, Czarnikow revised its 2026/27 global balance forecast from a surplus to a deficit of -100,000 MT on June 11, citing heightened ethanol production linked to rising oil prices.
Conab’s April report anticipated a -0.5% decline in Brazil’s 2026/27 sugar output to 43.952 MMT, with ethanol yields increasing +7.2% YoY. ISMA projected India’s 2025/26 output at 32 MMT following monsoon-related adjustments, though the USDA expects a 2.5 MMT surplus. Meanwhile, the ISO raised 2025/26 global production forecasts to a record 182 MMT (+3.5% YoY) but anticipates a -262,000 MT deficit in 2026/27 due to El Niño impacts.
USDA projections for 2026/27 show global food demand rising +0.4% YoY to 179.991 MMT, with production expected to decline -6.5% YoY to 184.854 MMT. Brazil’s output may drop -3.0% YoY to 42.5 MMT, while India could see +12% growth to 33.6 MMT due to improved monsoons. Thailand’s production is forecast to fall -15.6% YoY to 9.5 MMT, according to USDA-FAS.