October NY world sugar #11 (SBV26) settled down 0.19 cents (-1.07%) on Wednesday, while December London ICE white sugar #5 (SWZ26) declined 3.20 points (-0.63%). Prices retreated as market participants digested signs of weakening physical demand.
According to McDougall Global Views, open interest in the expiring October NY sugar contract suggests delivery volume could reach approximately 1.8 million metric tons (MMT), exceeding the six-year average. This elevated delivery pace is typically interpreted as a signal of sluggish nearby demand.
The pullback follows a rally to a 17.5-month high on September 10, fueled by expectations of a global supply deficit in the 2026/27 season. The International Sugar Organization (ISO) projects a 2026/27 deficit of 200,000 metric tons (MT), contrasting with a forecast 1.1 MMT surplus for 2025/26. Supporting the bullish longer-term outlook, the Thai Sugar Millers Corp. estimates 2026/27 production in Thailand—the world’s second-largest exporter—will drop 17% year-over-year to 10 MMT.
Analyst forecasts have diverged recently. Covrig Analytics now sees a 2026/27 deficit of 300,000 MT, reversing a June projection for a 100,000 MT surplus. Czarnikow warns of a deeper 2.9 MMT deficit for 2027/28, citing a shift toward ethanol production in Brazil amid high crude prices and weather disruptions in India, the EU, and Thailand. Conversely, StoneX narrowed its 2026/27 deficit estimate to 900,000 MT from 1.7 MMT previously.
Weather remains a critical variable. India’s cumulative monsoon rainfall through September 30 was 12.6% below normal, the weakest in 11 years, threatening output in the world’s second-largest producer. In response to tightening supplies, India’s Directorate General of Foreign Trade authorized up to 1 MMT of duty-free raw sugar imports through October 31—a rare move for a traditional exporter. Meanwhile, UNICA reported Brazil Center-South June production plummeted 26.3% year-over-year to 3.903 MMT.
Forecasts for the current 2025/26 season remain ample. The ISO projects record production of 182 MMT and a 1.1 MMT surplus. The USDA anticipates 2026/27 global production falling 6.5% to 184.854 MMT, with consumption rising to a record 179.991 MMT. The USDA’s Foreign Agricultural Service sees Brazil’s 2026/27 output dropping 3% to 42.5 MMT, India’s rising 12% to 33.6 MMT, and Thailand’s falling 15.6% to 9.5 MMT.
