For the second consecutive session on Wednesday, sugar futures finished sharply higher. New York contracts touched a 16.75-month high, while London white sugar reached its strongest level in a week. The advance reflects growing conviction that global supplies will tighten after a relatively comfortable 2025/26 season.
Forecasters Turn Bearish on Next Season
On Tuesday, the International Sugar Organization projected a 2026/27 global deficit of 200,000 MT, following an expected +1.1 MMT surplus in 2025/26. That outlook sits alongside sharper warnings from private analysts.
Green Pool Commodity Specialists, in a report last Thursday, called for a -3.2 MMT deficit in 2026/27 and trimmed its 2025/26 surplus estimate to 4.85 MMT from 4.93 MMT in July. Covrig Analytics on August 3 shifted to a -300,000 MT deficit for 2026/27, reversing a June call for a +100,000 MT surplus. StoneX on July 28 lifted its deficit forecast to -1.7 MMT from -550,000 MT in May, noting that Brazilian mills are favoring ethanol over sugar as crude prices surge amid the US-Iran war.
StoneX raised that 2026/27 deficit view again on August 18 to 1.7 MMT, while Covrig Analytics cut its surplus forecast to 100,000 MT from 380,000 MT in May. Czarnikow on August 14 predicted a -2.9 MMT deficit for 2027/28, with global production slipping 0.7% year over year to 177 MMT on weather disruptions in India, the EU and Thailand.
Europe and Brazil Output Under Pressure
The European Union's Sugar Market Observatory said last Thursday that EU 2026/27 sugar production is expected to fall 19% year over year to 13.4 MMT. Drought and heat across Europe and the UK are also set to push combined production down to 14.98 MMT this year—the lowest in 11 years—according to S&P Global Energy data.
Brazil, the world's largest sugar producer, is contributing to the bullish tone. Unica reported on August 6 that Center-South June sugar output dropped 26.3% year over year to 3.903 MMT. The USDA's Foreign Agricultural Service, in its May biannual report, forecast Brazil's 2026/27 production would fall 3.0% to 42.5 MMT.
India: Weak Monsoon Meets Import Relief
India ranks as the world's second-largest sugar producer, and this year's monsoon is raising alarms. The Meteorological Department reported Wednesday that cumulative rainfall from June through September stood 13% below normal as of September 2, though conditions had improved from 42% below normal on June 30. The Earth Science Ministry has warned the season could be the weakest in 11 years.
In a rare move signaling supply strain, India's Directorate General of Foreign Trade said on August 20 it will permit up to 1 MMT of tax-free raw sugar imports through October 31. India is typically a net exporter and last brought in sugar in large volumes during 2017-18.
The Indian Sugar and Bio-energy Manufacturers Association on April 7 lowered its 2025/26 production forecast to 32 MMT from 32.4 MMT and projects exports of 800,000 MT. India introduced export quotas in 2022/23 after late rains crimped output. The USDA on April 30, however, expects a 2026/27 surplus of 2.5 MMT in India—the first in two years—with FAS projecting production up 12% to 33.6 MMT on favorable rains and expanded acreage.
El Niño and the Current Crop Picture
Concerns that dry conditions linked to El Niño could curb rainfall in Brazil, India and Thailand—the three largest producing regions—remain supportive for prices. On July 8, the US Climate Prediction Center said the pattern that emerged across the equatorial Pacific last month could rank among the strongest in more than 75 years.
For the near term, the ISO still expects a record 2025/26 global crop. It forecasts production at a record 182 MMT, up 3.5% year over year, with a surplus of 1.1 MMT—down from a May estimate of 2.2 MMT but a rebound from a -3.46 MMT deficit in 2024-25. For 2026/27, ISO sees output falling 1% to 180.1 MMT.
The USDA's May report projected 2026/27 global production would decline 6.5% to 184.854 MMT from a record 186.056 MMT in 2025/26. Human consumption is expected to rise 0.4% to a record 179.991 MMT, while ending stocks could increase 2.0% to 44.410 MMT. FAS also forecast Thailand's 2026/27 production would fall 15.6% to 9.5 MMT.
Record Fund Length in London
An outsized long position by funds in London sugar may amplify any liquidation pressure. Last Friday's Commitment of Traders data showed managers added 2,830 net-long contracts in the week ended August 25, lifting holdings to a record 70,766—the highest since reporting began in 2011.