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October NY world sugar #11 (SBV26) closed up +0.88 (+5.65%) on Friday, and October London ICE white sugar #5 (SWV26) closed up +16.50 (+3.39%).
Sugar prices extended this week’s sharp rally on Friday, with NY sugar posting a 10-month nearest-futures high and London sugar posting an 11-month high. Concerns over lower global sugar production are propelling prices sharply higher. Due to drought and hot weather in Europe, sugar production in the European Union and the UK is set to decline to 14.98 MMT this year, the lowest level in 11 years, according to data from S&P Global Energy.
Lower sugar output in Brazil is also bullish for sugar prices after Unica reported on Thursday that Brazil Center-South June sugar production fell -26.3% y/y to 3.903 MMT. Brazil is the largest sugar-producing country in the world.
Since posting a 5-month low last Thursday, sugar prices have surged on the outlook for tighter future sugar supplies. On Monday, Covrig Analytics said it now expects a global sugar deficit in 2026/27 of -300,000 MT, compared to a June forecast for a +100,00 MT surplus. Meanwhile, Green Pool Commodity Specialists last Wednesday raised their global 2026/27 sugar deficit to -3.3 MMT from a June estimate of -1.76 MMT, and StoneX last Tuesday raised its 2026/27 global sugar deficit forecast to -1.7 MMT from a May estimate of -550,000 MT.
Concerns over India’s sugar crop are supporting prices. Last Friday, India’s Meteorological Department said that monsoon rainfall in India during August and September “will likely be below normal.” India’s Earth Science Ministry has warned that this year’s monsoon in India could be the weakest in 11 years. India’s monsoon season runs from June through September. India is the second-largest sugar-producing country in the world.
Concerns that dry weather from an El Niño event could disrupt global sugar production are bullish for prices. The emergence of an El Niño is likely to curb rainfall in Brazil, India, and Thailand, the world’s three largest sugar-producing regions. On July 8, the US Climate Prediction Center said the El Niño weather pattern that emerged across the equatorial Pacific last month will likely be one of the strongest in more than 75 years. India’s weather office recently lowered its cumulative rainfall estimate for the June-September monsoon season to 90% of the long-term average, down from a forecast of 92% issued in April.
Last Thursday, NY sugar matched a 5-month low amid the prospects of higher Indian sugar output as monsoon rains had improved. India’s Meteorological Department reported on Friday that India’s cumulative monsoon rainfall was 11% below normal as of August 7, a substantial improvement from 42% below normal on June 30.
As a bullish factor, sugar trader Czarnikow on June 11 cut its global 2026/27 sugar balance estimate from a surplus of 1.4 MMT to a deficit of -100,000 MT, as Brazil’s sugar mills produce more ethanol than sugar amid the recent surge in crude oil prices from the US-Iran war.
On April 28, Conab, in its initial report for the new sugar season, forecast that 2026/27 Brazilian sugar output will decline by -0.5% to 43.952 MMT, while ethanol output will climb by +7.2% y/y to 29.259 million liters.
On April 7, the Indian Sugar and Bio-energy Manufacturers Association (ISMA) revised its 2025/26 India sugar production forecast to 32 MMT, down from an earlier projection of 32.4 MMT. ISMA also projects India’s 2025/26 sugar exports of 800,000 MT. India introduced a quota system for sugar exports in 2022/23 after late rain reduced production and limited domestic supplies. Meanwhile, the USDA on April 30 said it expects a 2026/27 sugar surplus in India of 2.5 MMT, the first surplus in two years.
On May 18, the International Sugar Organization (ISO) forecasted a record global sugar crop for the 2025/26 season and raised its global surplus estimate. ISO forecasts 2025/26 global sugar production at a record 182 MMT, up +3.5% y/y, and raised its 2025/26 global sugar surplus estimate to 2.2 MMT from a February forecast of 1.22 MMT, rebounding from a -3.46 MMT deficit in 2024-25.
For 2026/27, however, ISO forecasts that global sugar production will fall by -1.15% y/y to 180 MMT, and that there will be a global sugar deficit of -262,000 MT, citing the potential impact of an El Niño weather pattern on harvests in India and Thailand. For 2026/27, StoneX on Tuesday raised its forecast to a global sugar deficit of 1.7 MMT from a May estimate of -550,000 MT, while Covrig Analytics cut its surplus forecast to 100,000 MT from a May estimate of 380,000 MT.
The USDA, in its biannual report released in May, projected that global 2026/27 sugar production would fall by 6.5% y/y to 184.854 MMT from a record 186.056 MMT in 2025/26. Global 2026/27 human sugar consumption is expected to increase +0.4% y/y to a record 179.991 MMT. The USDA also forecasts that 2026/27 global sugar ending stocks would increase by 2.0% y/y to 44.410 MMT. The USDA’s Foreign Agricultural Service (FAS) predicted that Brazil’s 2026/27 sugar production would fall by -3.0% y/y to 42.5 MMT. FAS predicted that India’s 2026/27 sugar production would increase by +12% y/y to 33.6 MMT, driven by favorable monsoon rains and increased sugar acreage. FAS predicted that Thailand’s 2026/76 sugar production will fall by -15.6% y/y to 9.5 MMT.
