Sugar Prices Climb Amid Warnings of Tight Global Supply

October NY world sugar #11 (SBV26) gained 0.25 points, or 1.42%, on Monday, while the October London ICE white sugar #5 (SWV26) contract did not trade due to a UK market holiday.

NY sugar closed markedly higher on Monday but stayed below last Friday’s peak, as expectations of a global sugar deficit continue to support prices. Over the past month, sugar prices have surged, with NY sugar reaching a 16.5‑month high last Friday and London sugar hitting a 17‑month high the previous Thursday.

The European Union’s Sugar Market Observatory announced on Thursday that EU sugar production for the 2026/27 season is projected to fall 19% year‑on‑year to 13.4 million metric tons. Additionally, Green Pool Commodity Specialists forecast a 2026/27 global sugar deficit of 3.2 million metric tons and reduced its 2025/26 surplus estimate from 4.93 million to 4.85 million metric tons.

On August 3, Covrig Analytics revised its 2026/27 global sugar deficit outlook to a shortfall of 300,000 metric tons, compared with a June prediction of a 100,000‑ton surplus. StoneX, on July 28, increased its 2026/27 deficit forecast to 1.7 million metric tons from a May estimate of 550,000 tons. Czarnikow, on June 11, shifted its 2026/27 balance from a 1.4‑million‑ton surplus to a 100,000‑ton deficit, citing Brazil’s mills diverting more cane to ethanol amid rising crude oil prices linked to the US‑Iran tensions.

A heavily long position held by funds in London sugar could amplify any liquidation pressure. Last Friday’s weekly Commitment of Traders (COT) report showed that speculators added 2,830 net‑long contracts to London ICE white sugar in the week ending August 25, pushing the total to a record 70,766 net‑long positions—the highest level since records began in 2011.

India’s Meteorological Department said on August 31 that cumulative monsoon rainfall (June‑September) was 14% below normal, a notable improvement from the 42% deficit recorded on June 30. On July 31, the agency forecast that rainfall for August and September will likely remain below normal. The Earth Science Ministry warned that this year’s monsoon could be the weakest in eleven years. The monsoon season runs from June to September, and India remains the world’s second‑largest sugar producer.

On August 20, India’s Directorate General of Foreign Trade announced that it will permit duty‑free imports of up to one million metric tons of raw sugar through October 31. The decision signals tightening global supply, as India normally exports sugar and last imported significant volumes during the 2017‑18 season.

Drought and high temperatures in Europe are expected to cut EU and UK sugar output to 14.98 million metric tons this year—the lowest level in eleven years, according to S&P Global Energy. On August 14, Czarnikow projected a 2027/28 global sugar deficit of 2.9 million metric tons, driven by reduced cane and beet plantings. The firm also forecast that 2027/28 global sugar production will decline 0.7% year‑on‑year to 177 million metric tons, mainly due to weather disruptions in India, the EU, and Thailand.

Lower Brazilian sugar output is bullish for prices after Unica reported on August 6 that Center‑South June sugar production fell 26.3% year‑on‑year to 3.903 million metric tons. Brazil remains the world’s largest sugar producer.

Concerns that an El Niño‑induced dry spell could curb sugar output are supportive of prices. An El Niño is likely to reduce rainfall in Brazil, India, and Thailand—the three biggest sugar‑producing regions. On July 8, the U.S. Climate Prediction Center said the El Niño pattern that emerged across the equatorial Pacific last month could become one of the strongest in over 75 years.

On April 7, the Indian Sugar and Bio‑energy Manufacturers Association (ISMA) trimmed its 2025/26 India sugar production forecast to 32 million metric tons, down from 32.4 million. ISMA also expects 2025/26 sugar exports of 800,000 metric tons. India introduced an export quota system in 2022/23 after late rains curtailed production and tightened domestic supplies. Meanwhile, the USDA projected on April 30 that India will post a 2.5‑million‑ton sugar surplus in 2026/27, its first surplus in two years.

On May 18, the International Sugar Organization (ISO) projected a record global sugar crop for the 2025/26 season and raised its surplus estimate. ISO forecast 2025/26 global sugar production at 182 million metric tons, a 3.5% year‑on‑year increase, and lifted its 2025/26 surplus estimate to 2.2 million metric tons from a February figure of 1.22 million, reversing a 3.46‑million‑ton deficit in 2024/25.

For 2026/27, however, ISO expects global sugar production to slip 1.15% year‑on‑year to 180 million metric tons, yielding a deficit of 262,000 metric tons, citing the possible impact of El Niño on harvests in India and Thailand. StoneX, on August 18, raised its 2026/27 deficit forecast to 1.7 million metric tons from a May estimate of 550,000 tons, while Covrig Analytics cut its surplus projection to 100,000 metric tons from a May estimate of 380,000 tons.

In its May biannual report, the USDA projected that global sugar production for 2026/27 will decline 6.5% year‑on‑year to 184.854 million metric tons, down from a record 186.056 million in 2025/26. Global human sugar consumption for 2026/27 is expected to rise 0.4% year‑on‑year to a record 179.991 million metric tons. The USDA also forecasts that 2026/27 global sugar ending stocks will increase 2.0% year‑on‑year to 44.410 million metric tons. The USDA’s Foreign Agricultural Service predicts Brazil’s 2026/27 sugar output will fall 3.0% year‑on‑year to 42.5 million metric tons, India’s output will rise 12% year‑on‑year to 33.6 million metric tons—supported by favorable monsoon rains and expanded acreage—and Thailand’s output will drop 15.6% year‑on‑year to 9.5 million metric tons.

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