Sugar Futures Spike on Anticipated 2026/27 Global Shortage

October NY world sugar #11 (SBV26) closed up +0.55 (+3.09%) on Tuesday, and October London ICE white sugar #5 (SWV26) closed up +19.60 (+3.81%).

Sugar prices jumped after the International Sugar Organization (ISO) projected a global deficit for the 2026/27 campaign. ISO forecast a shortfall of 200,000 metric tons for 2026/27, following a projected surplus of 1.1 million metric tons in 2025/26.

Additional forecasts amplified the bearish outlook. The European Union’s Sugar Market Observatory expects EU production to drop 19% year‑over‑year to 13.4 million metric tons in 2026/27. Green Pool Commodity Specialists forecast a larger deficit of 3.2 million metric tons for the same period, while Covrig Analytics revised its 2026/27 deficit to 300,000 metric tons. StoneX raised its deficit estimate to 1.7 million metric tons, and trader Czarnikow warned that Brazil’s shift toward ethanol production could tighten supplies further.

Market fundamentals are also being shaped by weather. India, the world’s second‑largest producer, has seen monsoon rainfall 14% below normal, prompting the government to allow tax‑free imports of up to 1 million metric tons through October. Europe faces a decline in output, with drought and heat expected to limit production to the lowest level in 11 years. Brazil’s center‑south sugar output fell 26% year‑over‑year in June, and an emerging El Niño pattern threatens rainfall across the three largest sugar‑producing regions.

Technical positioning may add pressure. The latest Commitment of Traders data showed funds extending their long positions in London ICE white sugar to a record 70,766 contracts, raising concerns about a possible short squeeze if the rally reverses.

Despite a record global production projection of 182 million metric tons for 2025/26, the shift to a deficit in 2026/27—driven by lower plantings and adverse weather—remains the dominant driver of higher prices.

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