Sugar prices fell to three-week lows on Friday before recovering slightly, with New York sugar settling lower while London white sugar finished marginally higher as demand concerns continued to weigh on the market.
October NY World Sugar #11 closed at 17.39 cents per pound, down 0.06 cents or 0.34%, while December London ICE White Sugar #5 closed at $532.30 per tonne, up $0.20 or 0.04%.
The market remains caught between two competing forces.
On the bearish side, weak physical demand, heavy deliveries against the expiring October London contract and substantial speculative long positions are creating liquidation risk.
On the other side, the medium-term supply outlook remains more supportive, with the International Sugar Organization forecasting a 2026/27 global deficit, while production risks are emerging in Thailand, India and Brazil.
This leaves sugar traders balancing near-term demand weakness against the possibility of tighter global supplies in the coming seasons.
Sugar Market Snapshot
| Factor | Current Signal |
|---|---|
| Oct 26 NY Sugar #11 | 17.39¢/lb |
| Daily move | -0.06¢ / -0.34% |
| Dec 26 London White Sugar #5 | $532.30/MT |
| Daily move | +$0.20 / +0.04% |
| October London sugar delivery | 499,350 MT |
| Delivery change YoY | +91% |
| 2026/27 ISO balance | 200,000 MT deficit |
| 2025/26 ISO balance | 1.1 MMT surplus |
| Thailand 2026/27 production estimate | 10 MMT, -17% YoY |
| StoneX 2026/27 deficit estimate | 1.7 MMT |
| Covrig 2026/27 deficit estimate | 300,000 MT |
| Czarnikow 2027/28 deficit estimate | 2.9 MMT |
| India monsoon rainfall | 15% below normal |
| India raw sugar imports permitted | Up to 1 MMT |
| Brazil Center-South June production | 3.903 MMT, -26.3% YoY |
Why Are Sugar Prices Falling?
The immediate pressure on sugar is coming from demand concerns and signs of weakness in the physical market.
The October London sugar contract expired earlier this week with 499,350 metric tons delivered, an increase of 91% from the same period last year.
The size of the delivery was one of the largest recorded for an October contract.
The unusually large volume suggests that physical demand has not been strong enough to absorb available supplies at prevailing prices.
That has provided a bearish signal for futures.
At the same time, sugar had previously rallied strongly on expectations of a global production deficit.
The market is now correcting some of those gains as traders reassess whether the anticipated supply tightness is sufficiently immediate to offset current demand weakness.
Large Speculative Positions Increase Liquidation Risk
Positioning is another important factor.
The latest CFTC Commitment of Traders report showed that managed money increased its net long NY sugar position by 28,055 contracts during the week ending September 8.
That took the overall net long position to 160,551 contracts, the highest level in almost three years.
Large speculative long positions can provide support while prices are rising.
However, they can also increase downside pressure if market sentiment changes.
If traders begin reducing those positions simultaneously, long liquidation can accelerate selling pressure regardless of the underlying longer-term supply fundamentals.
This is particularly relevant because NY sugar had recently reached a 17-month high.
The market therefore entered its current correction after a substantial speculative build-up.
Global Sugar Balance Is Becoming More Supportive
Despite the recent decline, the longer-term supply outlook remains an important bullish consideration.
The International Sugar Organization expects the global sugar market to move from a 1.1 million-tonne surplus in 2025/26 to a 200,000-tonne deficit in 2026/27.
That represents a significant change in the projected global balance.
The ISO expects global sugar production to decline approximately 1% year-on-year to 180.1 MMT in 2026/27.
The potential deficit is being driven by concerns over production in several major growing regions.
However, forecasts differ considerably between organizations.
StoneX currently sees a 1.7 MMT global deficit, while Covrig Analytics has also moved toward a deficit scenario.
Czarnikow is projecting an even larger 2.9 MMT deficit for 2027/28.
The differences between these estimates demonstrate the uncertainty surrounding future global production.
Thailand Production Outlook Adds Supply Concerns
Thailand remains one of the most important factors in the global sugar balance.
The country is the world’s second-largest sugar exporter, making changes in Thai production particularly important for international prices.
The Thai Sugar Millers Corp has projected that 2026/27 Thai sugar production could fall 17% year-on-year to approximately 10 MMT.
The USDA’s Foreign Agricultural Service has also projected a significant decline, forecasting Thai production at approximately 9.5 MMT.
Lower production from Thailand would reduce export availability and could tighten the global market if production losses are not offset elsewhere.
India’s Monsoon Is Another Key Supply Factor
India is also becoming increasingly important to the sugar outlook.
India’s Meteorological Department reported cumulative monsoon rainfall at 15% below normal as of September 16.
Although that represents a substantial improvement from the 42% deficit recorded at the end of June, rainfall remains below normal.
India is the world’s second-largest sugar producer, meaning weather conditions can have a significant influence on global availability.
The Indian government has also authorized up to 1 MMT of raw sugar imports without taxes through October 31.
The decision is notable because India is normally an important sugar exporter.
The move therefore highlights concerns surrounding domestic supply and the country’s sugar balance.
Brazil Production Adds Another Layer of Uncertainty
Brazil remains the world’s largest sugar-producing country and a critical component of global exports.
Recent production data has provided some support to sugar prices.
Unica reported that Center-South Brazil sugar production fell 26.3% year-on-year to 3.903 MMT in June.
Brazil’s sugar industry is also influenced by the relative economics of producing sugar versus ethanol.
Higher crude oil prices can improve the economics of ethanol production and encourage mills to allocate a greater share of sugarcane toward ethanol rather than sugar.
That can reduce the amount of sugar entering the global market.
Consequently, the relationship between crude oil prices, ethanol economics and Brazilian sugar production remains an important cross-market relationship for sugar traders.
El Niño Creates Additional Production Risk
Weather remains one of the biggest uncertainties surrounding the medium-term sugar outlook.
The U.S. Climate Prediction Center has warned that the developing El Niño weather pattern could become one of the strongest in decades.
El Niño can alter rainfall patterns across major agricultural regions.
For sugar, potential reductions in rainfall across Brazil, India and Thailand could affect cane development and yields.
The impact will depend heavily on the duration and severity of the weather pattern.
At present, weather risk is therefore providing a potential bullish counterweight to the weaker physical demand signals.
The Global Market Is Moving From Surplus Toward Deficit
The fundamental story is changing.
For 2025/26, the ISO expects:
182 MMT production
versus
1.1 MMT global surplus
For 2026/27, the organization forecasts:
180.1 MMT production
versus
200,000 MT global deficit
The USDA’s May forecast is somewhat different.
It expects 2026/27 global production of 184.854 MMT, down from 186.056 MMT in 2025/26.
Global human consumption is expected to rise 0.4% to 179.991 MMT, while ending stocks are projected to increase 2% to 44.410 MMT.
This illustrates why sugar prices remain difficult to assess.
Some forecasts point toward tightening supply, while others still show relatively comfortable inventories.
Bullish Sentiment
1. Global Deficit Forecasts Are Increasing
The ISO expects the global sugar market to move into a 200,000 MT deficit in 2026/27 after a 1.1 MMT surplus in 2025/26.
2. Thailand Production Could Decline Sharply
Thai production estimates point toward a potential decline of 15%-17%, reducing export availability from one of the world’s largest sugar suppliers.
3. Brazilian Production Has Been Weak
Center-South Brazil sugar production fell 26.3% year-on-year in June according to Unica.
4. India Is Allowing Sugar Imports
India’s decision to permit up to 1 MMT of raw sugar imports highlights concerns surrounding domestic supply.
5. El Niño Could Reduce Production
Potentially disruptive weather across Brazil, India and Thailand could tighten global sugar supplies.
6. Longer-Term Deficit Forecasts Are Increasing
StoneX estimates a 1.7 MMT deficit for 2026/27, while Czarnikow sees a potential 2.9 MMT deficit in 2027/28.
Bearish Sentiment
1. Sugar Fell to Three-Week Lows
NY sugar declined to its lowest level in three weeks before recovering slightly.
2. Large Physical Delivery Signals Weak Demand
The expired October London contract attracted 499,350 MT of deliveries, up 91% year-on-year.
3. Speculative Long Positions Are Elevated
Managed money held a net long position of 160,551 NY sugar contracts, leaving the market vulnerable to long liquidation.
4. 2025/26 Still Has a Global Surplus
The ISO expects a 1.1 MMT surplus for the current 2025/26 season.
5. USDA Forecasts Relatively High Production
The USDA expects 2026/27 global production to remain close to 185 MMT, while ending stocks are forecast to increase.
6. Demand Concerns Remain
The large London delivery against the expiring contract indicates that physical demand is currently struggling to absorb available sugar.
Sugar Prices Face a Fundamental Timing Problem
One of the most important questions for traders is when the expected supply deficit will actually become visible in physical markets.
The longer-term outlook may be tightening, but futures prices are influenced by the balance between current availability and expectations for future supply.
At present, physical-market indicators are sending mixed signals.
The very large October London delivery points toward weak immediate demand.
Meanwhile, production forecasts for 2026/27 and 2027/28 increasingly point toward potential deficits.
This creates a timing problem.
If supply concerns materialize faster than expected, sugar could regain upward momentum.
If production remains sufficient and demand stays weak, the market could continue correcting despite the longer-term deficit forecasts.
What Traders Are Watching Next
The major sugar-market catalysts include:
- Global sugar production forecasts
- ISO supply-and-demand revisions
- USDA sugar forecasts
- Thailand sugar production
- India’s monsoon rainfall
- Indian sugar imports and exports
- Brazil Center-South production
- Brazil sugar-versus-ethanol allocation
- Crude oil prices
- El Niño developments
- Global sugar consumption
- Physical sugar demand
- London contract deliveries
- ICE sugar positioning
- CFTC managed-money positioning
- Global ending stocks
- Currency movements in major producing countries
The relationship between crude oil and sugar will remain particularly important because stronger oil prices can improve the economics of Brazilian ethanol production.
That can potentially reduce the proportion of sugarcane processed into sugar and tighten global export availability.
Today Markets View
Sugar prices are currently caught between weak near-term demand and increasingly significant medium-term supply risks.
Friday’s modest decline in New York sugar followed a move to three-week lows, while London white sugar managed to finish marginally higher.
The immediate bearish signal is the 499,350 MT delivery against the expired October London contract, combined with elevated speculative long positioning.
However, the longer-term fundamental picture is less straightforward.
The ISO expects the global market to move from a 1.1 MMT surplus in 2025/26 to a 200,000 MT deficit in 2026/27, while other analysts see substantially larger deficits.
At the same time, Thailand faces potentially lower production, India’s rainfall remains below normal and Brazil has reported significant production weakness.
The key question for the market is therefore whether demand weakness and available inventories can continue to offset emerging production risks.
For now, the market is showing that traders are focused more heavily on current physical demand than on longer-term deficit projections.
That balance could change quickly if weather conditions deteriorate or production estimates are revised lower.
“Sugar is currently a market of competing timelines. Near-term physical demand remains a source of pressure, while production risks in Brazil, India and Thailand are increasingly shaping the medium-term outlook. The size of speculative long positions adds another layer of volatility, leaving the market particularly sensitive to changes in supply forecasts, weather and physical demand.”
— Louis Roche, Analyst, Today Markets
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