March NY world sugar #11 (SBH27) closed up +0.09 (+0.43%) on Tuesday, and December London ICE white sugar #5 (SWZ26) closed up +8.90 (+1.63%).

Sugar prices have rallied sharply over the past week, with NY sugar posting a 19-month nearest-futures high on Tuesday and London sugar posting a 7-week high.  Ongoing rains in Brazil’s Center-South sugar-growing region have slowed sugar harvesting and are disrupting cane crushing at Brazil’s sugar mills, curbing supplies. 

Sugar prices also have support from a stronger Brazilian real (^USDBRL).  The real climbed to a 4.75-month high against the dollar on Tuesday, discouraging export sales from Brazil’s sugar producers.

The outlook for a global deficit is also supporting sugar prices.  On September 1, the International Sugar Organization (ISO) projected a 2026/27 global sugar deficit of -200,000 MT versus a +1.1 MMT surplus for 2025/26.  Meanwhile, the Thai Sugar Millers Corp on September 7 projected that 2026/27 Thailand sugar production could fall -17% y/y to 10 MMT.  Thailand is the world’s second-largest sugar exporter. 

Concerns that dry weather from an El Niño event could disrupt global sugar production are also bullish for sugar prices.  A super El Niño is likely to curb rainfall in Brazil, India, and Thailand, the world’s three largest sugar-producing regions.  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. 

On August 3, Covrig Analytics said it now expects a global sugar deficit in 2026/27 of -300,000 MT, compared to a June forecast for a +100,000 MT surplus.  Meanwhile, Czarnikow on August 14 predicted a 2027/28 global sugar deficit of -2.9 MMT as Brazil’s sugar mills produce more ethanol than sugar amid the recent surge in crude oil prices from the US-Iran war. The group forecast that 2027/28 global sugar production will fall -0.7% yr/yr to 177 MMT, driven mainly by weather disruptions in India, the EU, and Thailand.

India’s Meteorological Department reported last Wednesday that India’s cumulative monsoon rainfall (June-Sep) was 12.6% below normal as of September 30, the weakest in 11 years. India’s monsoon season runs from June through September.  India is the world’s second-largest sugar-producing country. 

On August 20, India’s Directorate General of Foreign Trade said it will allow up to 1 MMT of raw sugar imports into the country free of any taxes until October 31. The move further signals the supply strain facing the global sugar market, as India is usually a sugar exporter and last imported sugar in substantial volumes during the 2017-18 season.

Lower sugar output in Brazil is bullish for sugar prices after Unica reported on August 6 that Brazil Center-South June sugar production fell -26.3% y/y to 3.903 MMT.  Brazil is the world’s largest sugar-producing country.

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.

The International Sugar Organization (ISO) projects a record global sugar crop for the 2025/26 season and a global sugar surplus.  ISO forecasts 2025/26 global sugar production at a record 182 MMT, up +3.5% y/y, and projects a 2025/26 global sugar surplus estimate of 1.1 MMT, down from a May forecast of 2.2 MMT, rebounding from a -3.46 MMT deficit in 2024-25. 

For 2026/27, however, ISO forecasts global sugar production to fall by -1% y/y to 180.1 MMT, with a global sugar deficit of -200,000 MT, citing the potential impact of an El Niño weather pattern on harvests in India and Thailand.  For 2026/27, StoneX on August 18 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.