Sugar Futures Mixed as Crude Oil Rally Fizzles; Global Supply Concerns Mount

October NY world sugar #11 (SBV26) settled down -0.04 (-0.23%) on Monday, while December London ICE white sugar #5 (SWZ26) rose +1.50 (+0.30%).

Sugar prices ended Monday’s session with mixed results. Initially supported by a sharp rally in WTI crude oil (CLX26), which jumped over +4%, sugar drew strength from expectations that higher ethanol prices could redirect global sugar mill output toward biofuel production, thereby tightening sugar supplies. However, crude oil reversed its gains later in the session, triggering long liquidation across sugar futures markets.

The Brazilian real (^USDBRL) fell to a one-month low on Monday, bolstering export competitiveness among Brazilian sugar producers and putting downward pressure on prices. Additionally, demand-side concerns continued to weigh on NY sugar, particularly as open interest in the expiring October contract signals weaker-than-usual participation ahead of Wednesday’s expiration.

Adding further bearish sentiment, StoneX revised its 2026/27 global sugar deficit forecast to -900,000 MT, narrowing from an earlier July projection of -1.7 MMT.

Despite recent volatility, the broader backdrop remains supportive for sugar prices. On September 10, NY sugar reached a 17.5-month high driven by expectations of a sustained global deficit. The International Sugar Organization (ISO) projected a 2026/27 global deficit of -200,000 MT, contrasting with a surplus of +1.1 MMT anticipated for 2025/26.

Thailand’s Sugar Millers Corp projected a 17% year-over-year decline in 2026/27 sugar output to 10 MMT, reinforcing concerns over supply tightness in key exporting regions. Weather-related risks also remain elevated, with India’s monsoon rainfall running 12% below normal as of September 28, despite some improvement since June.

Analysts continue to monitor El Niño conditions, which are expected to reduce rainfall across major producing nations—including Brazil, India, and Thailand—potentially disrupting harvests and limiting output. These climatic uncertainties, combined with shifting trade policies and mill-level dynamics, suggest ongoing volatility in global sugar markets through the 2026/27 season.

As of the article’s publication date, Rich Asplund held no positions in any securities referenced herein. This content is provided for informational purposes only.

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