Sugar markets remain caught between competing fundamental forces. New York sugar is finding support from concerns that persistent rainfall in Brazil could slow the Center-South harvest, while longer-term supply risks in India and Thailand continue to underpin the global balance.

However, the upside remains constrained by evidence of weak physical demand and increasingly large speculative long positions. The latest StoneX estimate also reduced its projected 2026/27 global deficit to 900,000 metric tons, compared with its previous estimate of 1.7 million tons, reducing some of the bullish momentum that had pushed sugar sharply higher earlier in September.

The market is therefore entering a period where weather, production estimates, physical demand and speculative positioning are likely to determine the next major move.

Market Snapshot

Current Sugar Price Action

New York October sugar is currently around 17.72 cents per pound, while December London white sugar is around $510.30 per metric ton.

The mixed performance highlights the uncertainty surrounding the market. Sugar recently reached a 17.25-month high on September 10 on expectations of a developing global deficit, but prices subsequently retreated as traders began focusing more heavily on physical demand and the possibility that global supply estimates could improve.

The latest StoneX revision is particularly important. Its projected 2026/27 deficit has been reduced from 1.7 MMT to 900,000 MT, suggesting that the global balance may be tighter than historical surplus years but not as constrained as previously expected.

Brazil Harvest Weather Remains a Key Catalyst

Brazil remains the single most important supply variable for the global sugar market.

Recent rainfall across Brazil is slowing the sugarcane harvest, creating concerns about the pace at which cane can be processed. Any prolonged disruption could reduce near-term sugar availability and potentially increase competition between sugar production and ethanol.

Brazil’s Center-South region is particularly important because it represents the world’s largest concentration of sugar production.

Earlier data from Unica showed Center-South June sugar production falling 26.3% year-on-year to 3.903 MMT, highlighting the sensitivity of Brazilian output to harvest conditions.

Weather developments across Brazil will therefore remain one of the most important drivers of sugar prices.

India Supply Outlook Is Becoming More Complicated

India is another major source of uncertainty.

Cumulative monsoon rainfall was 15% below normal as of September 23, although the deficit has improved substantially from 42% below normal at the end of June.

The Indian Meteorological Department has warned that the current monsoon could become the country’s weakest in 17 years.

This is important because India is the world’s second-largest sugar producer and relies heavily on the monsoon to support sugarcane yields.

India has also authorised up to 1 MMT of raw sugar imports without taxes through October 31. The decision is significant because India normally operates as a major sugar exporter and has not imported substantial volumes since the 2017/18 season.

The import allowance suggests that domestic supply conditions remain an important concern despite longer-term forecasts for higher production.

Thailand Production Faces Downside Risk

Thailand remains another major supply concern.

The Thai Sugar Millers Corporation has projected 2026/27 production at approximately 10 MMT, representing a potential 17% year-on-year decline.

Thailand is the world’s second-largest sugar exporter, meaning any significant reduction in production could tighten the exportable global balance.

The USDA is somewhat less bearish, forecasting Thai production at 9.5 MMT, still representing a substantial year-on-year decline of 15.6%.

The difference between private and government-linked estimates highlights the uncertainty surrounding the coming crop.

Global Sugar Balance

The global supply picture remains mixed.

The International Sugar Organization expects:

• 2025/26 production: 182 MMT
• 2025/26 balance: 1.1 MMT surplus
• 2026/27 production: 180.1 MMT
• 2026/27 balance: 200,000 MT deficit

This represents a significant change from the surplus expected for 2025/26.

StoneX previously projected a larger 2026/27 deficit of 1.7 MMT but has now reduced that figure to 900,000 MT.

Covrig Analytics previously shifted its outlook from a 100,000 MT surplus to a 300,000 MT deficit, while Czarnikow has projected a much larger 2.9 MMT deficit for 2027/28.

The forecasts therefore point in broadly the same direction — tighter medium-term supply — but differ significantly on the scale of the potential deficit.

Speculative Positioning Could Increase Volatility

Fund positioning is another important factor.

The latest Commitment of Traders report showed funds increasing their net long New York sugar position by 791 contracts to 161,342 contracts.

That is the largest net-long position in almost three years.

The size of the speculative position creates two opposing effects.

If supply concerns intensify, large existing long positions could reinforce upward momentum.

However, if production expectations improve or demand remains weak, funds could begin liquidating those positions, potentially accelerating a downside move.

The recent decline from the September high therefore needs to be viewed alongside positioning rather than price alone.

Bullish Sentiment

1. Brazilian harvest delays – Rainfall is slowing Center-South harvesting, potentially restricting near-term sugar availability.
2. India’s weak monsoon – Rainfall remains below normal and creates uncertainty around cane yields and future production.
3. India allowing duty-free imports – The decision to permit up to 1 MMT of raw sugar imports indicates domestic supply concerns.
4. Thailand production risks – Private estimates point to a substantial decline in Thai production, tightening export availability.
5. 2026/27 global deficit – Even after the StoneX revision, the market is still projected to remain in deficit.
6. Potential El Niño impact – Weather risks across Brazil, India and Thailand could reduce global production further.
7. Strong speculative positioning – Large fund long positions indicate that traders remain positioned for tighter supply conditions.

Bearish Sentiment

1. StoneX reduced its deficit forecast – The projected 2026/27 deficit has been cut from 1.7 MMT to 900,000 MT.
2. Weak physical demand – The large London October delivery of 499,350 MT points to subdued physical demand.
3. Large speculative long position – A significant fund position increases the risk of long liquidation if the market weakens.
4. 2025/26 global surplus – The current season remains well supplied, with ISO forecasting a 1.1 MMT surplus.
5. Potentially higher Indian production – The USDA forecasts India’s 2026/27 production to increase 12% to 33.6 MMT.
6. Higher global stocks – USDA forecasts 2026/27 ending stocks at 44.410 MMT, up 2% year-on-year.
7. Production estimates remain divergent – Different agencies continue to forecast substantially different global balances, creating uncertainty over how tight the market actually is.

Price Forecast: What Traders Are Watching

The sugar market is now approaching a critical point after retreating from its September high.

The key question is whether the recent decline represents a correction within a broader tightening supply cycle or the beginning of a deeper adjustment driven by weak demand and improving production expectations.

For the bullish scenario to regain momentum, traders will likely need confirmation that Brazilian rainfall is materially reducing harvest volumes and that India and Thailand face additional production losses.

A renewed move toward the September highs would become more plausible if global deficit estimates begin moving higher again.

Conversely, continued weakness in physical demand, improved Brazilian harvesting conditions or further reductions in projected deficits could keep sugar under pressure.

The large fund net-long position also means that any significant fundamental deterioration could amplify downside volatility through liquidation.

Supply Outlook

The medium-term supply outlook remains highly dependent on weather.

Brazilian harvest progress is the immediate focus, while India’s monsoon and Thailand’s cane crop represent the major risks for the next production cycle.

The ISO’s forecast of 180.1 MMT of global production for 2026/27 implies a decline from the previous season, while USDA estimates are considerably higher at 184.854 MMT.

The gap between these estimates shows how uncertain the global supply picture remains.

The next round of production data from Brazil, India and Thailand will therefore be critical in determining whether the projected deficit expands or contracts.

Demand Outlook

Demand is currently one of the weaker parts of the sugar story.

The large 499,350 MT delivery against the expired London October contract is particularly important because it indicates that physical demand has not kept pace with the bullish supply narrative.

If demand remains subdued while production estimates improve, sugar could struggle to sustain higher prices.

However, if lower production begins to tighten physical availability and demand stabilises, the current deficit forecasts could regain greater influence over prices.

Market Outlook for the Coming Sessions

Sugar is entering the next phase with a clear conflict between tightening medium-term supply risks and weaker near-term demand.

Brazilian rainfall and harvest progress will remain the immediate catalyst. Any evidence that the weather is materially reducing cane processing could quickly restore bullish momentum.

At the same time, traders will monitor India’s monsoon, Thailand production expectations and changes to global deficit estimates.

Fund positioning adds another layer of risk. With speculative net longs near a three-year high, the market could experience larger-than-normal moves in either direction as traders adjust exposure.

The key signal for the coming sessions will be whether supply concerns begin outweighing the evidence of weak physical demand.

Currency Hedger View

Sugar is traded internationally in US dollars, making currency movements an important consideration for producers, refiners, importers and commercial buyers.

A stronger dollar can increase the effective cost of sugar for buyers using other currencies, potentially adding pressure to international demand. Conversely, a weaker dollar could improve purchasing power for non-dollar buyers and provide additional support to commodity demand.

For businesses with significant sugar purchases or sales denominated in US dollars, managing the underlying FX exposure can be just as important as monitoring the sugar price itself.

Currency Hedger provides solutions for businesses managing international currency exposure around commodity transactions and cross-border payments.

Visit www.currencyhedger.com for more information.

Analysis Louis Roche – Today Markets

Sugar remains fundamentally divided between a potentially tightening 2026/27 supply balance and clear signs that current physical demand is not sufficiently strong to support the market at recent highs.

Brazilian harvest delays, India’s weak monsoon and the possibility of lower Thai production continue to provide a bullish foundation. However, the reduction in StoneX’s deficit forecast to 900,000 MT demonstrates how quickly the supply outlook can change as new production data becomes available.

The large London October delivery and elevated speculative long positioning are equally important. If physical demand remains weak, funds could become a source of additional selling pressure rather than support.

For the coming sessions, the focus should remain on Brazilian harvest progress, Indian weather, Thai production estimates, global balance revisions and speculative positioning. A renewed deterioration in production expectations could bring the global deficit narrative back to the forefront, while improving supply estimates and weak demand would leave the market vulnerable to further liquidation.

Louis Roche – Today Markets

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