Sugar Prices Rally as India Cuts Sugar Import Duties

On Oct. 24, worldwide NYB sugar rose 0.08 (+0.46%) and Oct. 24 London ICE white sugar surged 12.90 (+2.38%).

Sugar prices built on this week’s gains as NY sugar touched a 15‑month high and London sugar reached a 17‑month high; however, both slipped briefly after modest profit‑taking by commodity funds.

These higher price levels stem from tighter global supply conditions, after India announced a reduction in tariffs on raw sugar imports to lessen shortages ahead of a peak in demand during the upcoming festive season. The government will allow up to 1 MMT of raw sugar imports duty‑free through Oct. 31, a further signal of constrained supply in markets where India traditionally exceeds its imports, especially after sending large volumes abroad in the 2017‑18 season.

International sugar prices have accelerated this month, driven by outlook for diminished future supplies. Covrig Analytics revised its 2026/27 projection to a –300,000 MT gap versus a prior optimistic surplus, while Green Pool Commodity Specialists raised its 2026/27 deficit forecast to –3.3 MMT from a smaller June baseline. StoneX concurrently lifts its outlook to –1.7 MMT, and analyst Czarnikow trims his global balance estimate to –100,000 MT after citing Brazil’s shift toward ethanol given rising crude‑oil costs linked to the US‑Iran conflict.

Monsoon performance is another factor. Brazil, the world’s largest sugar producer, reported that Central‑South monsoon rainfall in June was 13 % below normal as of Aug. 19, marking a significant improvement over the 42 % shortfall recorded on Jun. 30. Subsequent warnings issued on July 31 indicate August‑season rains are also likely to miss targets. India’s space agency cautions that the current monsoon could be the weakest in eleven years, a phenomenon spanning June‑September—the principal sugar‑harvest window—and reinforces India’s role as the second‑largest sugar exporter.

Forecasts highlight expanding deficits, adding buoyancy to price moves. Czarnikow projects a –2.9 MMT shortfall for 2027/28, attributing the gap to lower cane and sugarbeet plantings; production is expected to decline 0.7 % annually to 177 MMT, primarily hampered by climate stress in India, the EU, and Thailand. Likewise, the European Union’s sugar output is forecast to fall to 14.98 MMT this year—its lowest in eleven years—according to S&P Global Energy data.

Ahead of heightened demand, analysts cite the El Niño event as a catalyst for higher prices. Warming patterns emerging in the equatorial Pacific are likely to depress rainfall across Brazil, India, and Thailand—the planet’s three largest sugar‑producing regions. The U.S. Climate Prediction Center characterizes the developed El Niño as one of the most powerful in decades, underscoring the risk to harvests.

Production reductions continue to bolster sentiment. Brazil’s central south district posted a 26.3 % year‑over‑year decline in June, dropping to 3.903 MMT, reinforcing bearish pressure on global prices.

Larger outlooks project deepening supply constraints. Czarnikow foresees a –2.9 MMT shortfall for 2027/28, driven by reduced plantings, while global production is set to fall 1.15 % to 180 MMT, creating a –262,000 MT gap under El Niño influence. For the nearer term, the USDA predicts India will enjoy a 2.5 MMT surplus in 2026/27, its first such surplus in two years.

Commodity market forecasts also reflect sectoral trends. Conab’s initial 2026/27 report narrows Brazil’s output to 43.952 MMT, with ethanol growth climbing 7.2 % to 29.259 million litres, signaling domestic market dynamics.

The International Sugar Organization confirms a record 2025/26 harvest at 182 MMT, a 3.5 % gain, and lifts the global surplus expectation to 2.2 MMT, overturning a negative balance observed in 2024/25.

Looking forward, the ISSO modifies its 2026/27 projection, forecasting production down 1.15 % to 180 MMT and widening the deficit to –262,000 MT, citing severe El Niño‑related threats.

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