October NY world sugar #11 (SBV26) declined 0.64 cents (-3.52%), while October London ICE white sugar #5 (SWV26) fell $13.20 (-2.52%) as early session gains evaporated.
Sugar futures surrendered an initial advance and slid sharply after the Brazilian real dropped to a two-week low against the U.S. dollar. The weaker currency incentivized export selling from Brazil’s producers, triggering long liquidation in the futures market.
Despite the pullback, prices have rallied significantly over the past month, with NY sugar reaching a 16.5-month high and London sugar touching a 17-month high earlier this week. Tighter global supply expectations continue to underpin the market. The European Union’s Sugar Market Observatory projects EU 2026/27 production will fall 19% year-over-year to 13.4 million metric tons (MMT). Green Pool Commodity Specialists forecasts a 2026/27 global deficit of 3.2 MMT and trimmed its 2025/26 surplus estimate to 4.85 MMT from 4.93 MMT in July.
Covrig Analytics now sees a 2026/27 deficit of 300,000 MT, reversing a June forecast for a 100,000 MT surplus. StoneX raised its 2026/27 deficit projection to 1.7 MMT from 550,000 MT in May. Czarnikow shifted its 2026/27 balance estimate from a 1.4 MMT surplus to a 100,000 MT deficit, citing Brazilian mills diverting more cane to ethanol amid surging crude oil prices.
India’s cumulative monsoon rainfall through August 26 was 13% below normal, though improved from a 42% deficit at end-June. The India Meteorological Department expects August-September rainfall to remain below normal, with the Earth Sciences Ministry warning this could be the weakest monsoon in 11 years. India is the world’s second-largest sugar producer.
Signaling supply strain, India’s Directorate General of Foreign Trade authorized up to 1 MMT of duty-free raw sugar imports through October 31. India typically exports sugar and last imported significant volumes in 2017-18.
Drought and heat in Europe are expected to reduce EU and UK sugar output to 14.98 MMT this year, an 11-year low per S&P Global Energy. Czarnikow projects a 2.9 MMT global deficit for 2027/28, with production slipping 0.7% to 177 MMT due to weather disruptions in India, the EU, and Thailand.
Brazil’s Center-South June sugar production plunged 26.3% year-over-year to 3.903 MMT, according to UNICA data released August 6, providing further bullish support. Brazil is the world’s largest sugar producer.
El Niño concerns remain elevated. The U.S. Climate Prediction Center indicated on July 8 that the current El Niño could rank among the strongest in 75 years, threatening rainfall in Brazil, India, and Thailand—the top three sugar-producing regions.
The Indian Sugar and Bio-energy Manufacturers Association (ISMA) revised its 2025/26 India production forecast down to 32 MMT from 32.4 MMT, with exports pegged at 800,000 MT. India has maintained export quotas since 2022/23. Conversely, the USDA projects a 2.5 MMT surplus for India in 2026/27, the first in two years.
The International Sugar Organization (ISO) forecasts a record 182 MMT global crop for 2025/26 (+3.5% year-over-year) and a 2.2 MMT surplus, up from a February estimate of 1.22 MMT. For 2026/27, ISO sees production falling 1.15% to 180 MMT with a 262,000 MT deficit, citing El Niño risks to Indian and Thai harvests. StoneX and Covrig Analytics have similarly tightened their 2026/27 outlooks.
The USDA’s May biannual report projects 2026/27 global production down 6.5% to 184.854 MMT, with consumption rising 0.4% to a record 179.991 MMT. Ending stocks are seen up 2.0% to 44.410 MMT. Brazil’s 2026/27 output is forecast to drop 3.0% to 42.5 MMT, while India’s rises 12% to 33.6 MMT on favorable monsoons and acreage gains. Thailand’s production is expected to fall 15.6% to 9.5 MMT.
