October NY world sugar #11 (SBV26) closed down -0.63 (-3.46%) on Friday, while October London ICE white sugar #5 (SWV26) fell -9.90 (-1.89%).
Sugar futures surrendered early gains and experienced a sharp selloff on Friday, driven by long liquidation pressures following weakness in the Brazilian real. The currency (^USDBRL) dropped to a two-week low against the US dollar, prompting Brazilian sugar producers to accelerate export sales.
With funds maintaining substantial long positions in London sugar, any long liquidation can trigger amplified downside momentum. Friday’s Commitment of Traders (COT) data revealed that funds increased their net-long positions in London ICE white sugar by 2,830 lots in the week ending August 25, reaching a record 70,766 positions—the highest since records began in 2011.
Sugar prices had rallied significantly over the past month, with NY sugar hitting a 16.5-month high on Friday and London sugar reaching a 17-month high on Thursday. The bullish trend reflects concerns over tighter global sugar supplies. Analysts cite expectations of reduced production, including the European Union’s Sugar Market Observatory projecting EU 2026/27 sugar output to decline 19% year-over-year to 13.4 million metric tons (MMT). Additionally, Green Pool Commodity Specialists forecast a global sugar deficit of 3.2 MMT for 2026/27, revising its earlier surplus estimate downward.
Analyst forecasts continue to shift toward supply deficits. Covrig Analytics revised its 2026/27 global sugar outlook from a surplus to a deficit of 300,000 metric tons, while StoneX increased its projected deficit to 1.7 MMT. Sugar trader Czarnikow also adjusted its forecast, moving from a surplus to a deficit citing Brazil’s focus on ethanol production amid rising crude oil prices.
India faces agricultural challenges that threaten sugar output. The country’s monsoon rainfall was 13% below normal as of August 26, despite some improvement from earlier deficits. With India being the world’s second-largest sugar producer, continued dry conditions could further strain global markets.
In a notable policy move, India’s Directorate General of Foreign Trade announced it would permit up to 1 MMT of raw sugar imports free of duties through October 31, signaling ongoing supply pressures in the domestic market.
European sugar production is also projected to decline due to adverse weather conditions. Data from S&P Global Energy indicates EU and UK sugar output could fall to 14.98 MMT this year, marking an eleven-year low.
Brazil’s sugar production challenges remain a key factor supporting prices. Unica reported that Center-South sugar production in June fell 26.3% year-over-year to 3.903 MMT, highlighting ongoing supply constraints from the world’s largest producer.
The potential impact of El Niño poses additional risks to global sugar production. The US Climate Prediction Center warns that this El Niño event could rank among the strongest in over 75 years, potentially reducing rainfall in Brazil, India, and Thailand—the world’s top three sugar-producing regions.
The USDA’s May report provided mixed signals for the 2026/27 season. While projecting a modest 0.4% increase in global sugar consumption to a record 179.991 MMT, it also forecasts a 6.5% decline in global production to 184.854 MMT, suggesting tightening supplies ahead.
