March NY world sugar #11 (SBH27) closed down 0.27 points, or 1.28%, at 20.86, while December London ICE white sugar #5 (SWZ26) fell 7.00 points, or 1.25%, to 552.00.
After an early rally, sugar prices reversed course on Wednesday as the U.S. dollar index surged to a 1.5‑year high, prompting widespread long liquidation in sugar futures. The sharp dollar strength eroded investor appetite for commodity positions, sending prices sharply lower.
Market participants note that speculative funds have built an unusually large long position in NY sugar futures. According to the latest Commitment of Traders report, funds increased their net long exposure by 60,442 contracts in the week ended Oct. 6, reaching a net long of 212,559 contracts—the highest level in more than three years.
Sugar had been on an upward trajectory over the past three weeks, with NY sugar hitting a 19‑month peak on Wednesday and London white sugar reaching a 22‑month high last week. Production disruptions in Brazil’s Center‑South region, where lingering rains have slowed harvesting and cane crushing, have tightened supplies and underpinned the rally.
Fundamental outlooks also support higher prices. The International Sugar Organization (ISO) projects a global deficit of 200,000 metric tons for the 2026/27 season, reversing the 1.1‑million‑ton surplus expected in 2025/26. Thai Sugar Millers Corp. anticipates a 17% year‑over‑year decline in Thailand’s 2026/27 output to 10 million tons, underscoring supply constraints.
Weather‑related concerns are intensifying. Japan’s Meteorological Agency reported that tropical Pacific surface temperatures were 4 °C above normal in September—the warmest on record since 1949. A persistent, record‑strong El Niño is expected to continue through Q1, potentially curbing rainfall across Brazil, India, and Thailand, the world’s three largest sugar producers. This pattern raises the risk of floods, droughts, and temperature volatility that could further crimp production.
In India, cumulative monsoon rainfall from June to September was 12.6% below normal, the weakest in 11 years, threatening the country’s sugar output. India, the world’s second‑largest producer, has also moved to ease supply pressures by allowing up to 1 million metric tons of raw sugar imports duty‑free until Oct. 31.
Analytical firms have revised their forecasts in response to these dynamics. Covrig Analytics now expects a 2026/27 global deficit of 300,000 tons, down from a prior surplus projection. Czarnikow predicts a 2027/28 deficit of 2.9 million tons, citing Brazil’s shift toward ethanol production amid higher crude oil prices.
Brazil’s June sugar production fell 26.3% year‑over‑year to 3.903 million tons, reinforcing the bullish sentiment for the commodity. Meanwhile, the Indian Sugar and Bio‑energy Manufacturers Association (ISMA) downgraded its 2025/26 production estimate to 32 million tons and projects exports of 800,000 tons.
The ISO expects a record global sugar crop of 182 million tons in 2025/26, delivering a modest surplus of 1.1 million tons. However, for 2026/27, ISO forecasts a 1% decline in production to 180.1 million tons, resulting in a 200,000‑ton deficit.
The USDA’s May biannual report projects 2026/27 global production at 184.854 million tons, a 6.5% drop from the previous year, while consumption is seen rising 0.4% to a record 179.991 million tons. Ending stocks are expected to increase 2% to 44.410 million tons. Country‑specific outlooks include Brazil’s production at 42.2 million tons (‑2.5% y/y), India at 29.5 million tons (‑1.7% y/y), and Thailand at 9.5 million tons (‑15.6% y/y).