Sugar prices are under renewed pressure as India’s decision to halt new ethanol procurement from sugar-based feedstocks threatens to increase available sugar supplies, while favourable harvesting weather in Brazil could accelerate production. March 2027 New York raw sugar futures fell 1.34% to settle at the reported level, while December London white sugar futures declined 1.46%, as traders reassessed the near-term supply outlook.

The sugar price forecast remains caught between competing forces. India’s policy shift and improving Brazilian harvest conditions are bearish in the short term, but the market faces potential longer-term supply constraints from El Niño, weaker production forecasts in Thailand and India, and projections for a global sugar deficit in 2026/27. With speculative fund positions at their highest net-long level in more than five years, further selling could amplify price volatility.

Market Snapshot

The supplied market figures and forecasts come from different reporting dates and organisations. Production and deficit estimates are not directly interchangeable and remain subject to revision.

Current Sugar Price Action: Supply Concerns Trigger a Pullback

New York raw sugar futures fell 1.34%, while London white sugar declined 1.46%, as traders reacted to India’s ethanol procurement decision and the prospect of faster Brazilian harvesting.

The declines follow a strong rally over the preceding month. New York sugar recently reached a 19-month nearest-futures high, while London sugar recorded a 22-month high earlier in October. Those gains were supported by persistent rainfall in Brazil’s Center-South region, which slowed harvesting and disrupted cane crushing at sugar mills.

The latest weather outlook points towards hotter, drier conditions, potentially allowing harvesting and crushing to resume more rapidly. This could increase the flow of sugar into the market and reduce some of the supply pressure that supported the previous rally.

The reversal also comes at a time when speculative funds hold a substantial net-long position. If traders begin closing bullish positions, selling pressure could intensify beyond the immediate impact of changing supply expectations.

India’s Ethanol Policy: A Bearish Signal for Sugar

India’s government has ordered state-owned fuel retailers to stop procuring ethanol produced from sugar as of November 1, according to the supplied report.

The decision could redirect more sugar feedstock towards the sugar market rather than ethanol production, increasing the amount potentially available for consumption or export. The size of the impact will depend on how producers adjust their feedstock choices, the implementation of the directive and the availability of alternative ethanol sources.

India is one of the world’s largest sugar producers and consumers, making its domestic policy particularly important to international prices.

However, the policy shift does not automatically translate into a large increase in exportable sugar. Domestic consumption, existing inventories, production levels and government trade restrictions will also determine how much additional supply reaches the global market.

Traders will be watching for evidence of changes in Indian sugar production, ethanol output, export availability and domestic stock levels.

Brazil Sugar Production Outlook: Drier Weather Could Accelerate Harvesting

Brazil remains the most influential producer in the global sugar market. Its Center-South region accounts for a major share of national production, making weather and mill operations critical to international prices.

Forecasts for hot, dry weather could improve field access and allow harvesting and cane crushing to resume following earlier rainfall disruptions.

This creates a short-term bearish risk: faster crushing could increase sugar availability just as traders are reassessing the effects of India’s ethanol policy.

However, the broader production outlook remains uncertain. Unica previously reported that Brazil’s Center-South sugar production in June fell 26.3% year-on-year to 3.903 million tonnes. That historical decline highlights how weather and processing disruptions can materially affect output, but it does not establish the current production trajectory.

The key question is whether improved harvesting conditions will lead to a sustained recovery in output or whether earlier disruptions and later weather risks will continue to constrain production.

Bullish Sentiment: Factors That Could Support Sugar Prices

1. Projected global deficit in 2026/27: The International Sugar Organization forecasts a deficit of 200,000 tonnes, contrasting with the projected 1.1-million-tonne surplus for 2025/26.
2. El Niño production risks: Potentially adverse weather across Brazil, India and Thailand could reduce yields and disrupt harvesting, tightening global supply.
3. Lower Thai production forecasts: Estimates from the Thai Sugar Millers Corp and USDA point to significant production declines, although their forecasts differ.
4. Potentially weaker Indian output: The USDA’s Foreign Agricultural Service forecasts India’s 2026/27 sugar production at 29.5 million tonnes, down 1.7% year-on-year.
5. Longer-term supply uncertainty: Forecasts from StoneX and other analysts indicate that the global balance could tighten more substantially than the ISO baseline suggests.
6. Crude oil and ethanol economics: Elevated oil prices can improve the relative attractiveness of ethanol production, potentially encouraging some Brazilian mills to allocate more cane towards ethanol rather than sugar, depending on margins and policy incentives.
7. Historical production disruptions: Previous weather-related declines in Brazilian output demonstrate how quickly supply expectations can change when harvesting and crushing are interrupted.

Bearish Sentiment: Risks That Could Extend the Decline

1. India’s ethanol procurement change: Reduced procurement of sugar-based ethanol could free up feedstock for sugar production, potentially increasing market availability.
2. Faster Brazilian harvesting: Drier conditions may allow mills to resume crushing and increase sugar output after earlier weather-related disruptions.
3. Heavy speculative long positioning: Funds’ net-long NY sugar position reached 228,743 contracts, the highest in more than five years. A reversal in sentiment could trigger substantial long liquidation.
4. The 2025/26 global surplus: The ISO forecasts a surplus of 1.1 million tonnes, providing a near-term supply cushion despite the projected deficit in the following season.
5. Potentially higher global ending stocks: USDA forecasts 2026/27 global ending stocks of 44.410 million tonnes, up 2% year-on-year, illustrating that a projected decline in production does not necessarily mean inventories will fall.
6. Recovery in Brazilian output: If harvesting accelerates and mill throughput improves, the additional supply could weaken prices even if longer-term production risks remain.
7. Conflicting global balance forecasts: Estimates range from a relatively small deficit to a much larger shortfall, creating uncertainty over the severity and timing of any supply squeeze.

Sugar Price Forecast: What Traders Are Watching

The immediate sugar outlook has turned more cautious following the declines in New York and London futures.

Bearish scenario: Prices could face additional pressure if India’s policy change increases sugar availability, Brazilian harvesting accelerates and speculative funds begin reducing their substantial long positions. Confirmation of stronger Brazilian output or higher export availability from India would reinforce this scenario.

Bullish scenario: Sugar could recover if weather-related disruptions intensify, Brazilian production fails to rebound as expected or evidence emerges that the global market is moving towards a meaningful deficit in 2026/27. Stronger crude oil prices could also support sugar if ethanol production becomes more attractive relative to sugar output.

Consolidation scenario: Prices could stabilise if bearish near-term developments are offset by longer-term production concerns. In that case, the market may remain volatile as traders weigh immediate supply improvements against the possibility of weather-driven shortages later in the season.

The supplied information does not establish reliable technical support or resistance levels. The latest declines indicate short-term selling pressure, but a sustained trend will depend on subsequent production, trade and positioning data.

Global Sugar Supply Outlook: Surplus Today, Potential Deficit Ahead

The global sugar balance presents a complicated picture because forecasts differ by season and organisation.

The ISO projects record production of 182 million tonnes in 2025/26, up 3.5% year-on-year, with a surplus of 1.1 million tonnes. For 2026/27, it forecasts production declining by 1% to 180.1 million tonnes and the market moving into a deficit of 200,000 tonnes.

Other estimates suggest a tighter balance. StoneX has projected a 2026/27 deficit of 1.7 million tonnes, while Covrig Analytics has also revised its expectations towards a less comfortable supply position. These estimates differ from the ISO’s baseline and should be treated as separate forecasts rather than combined into a single figure.

The USDA’s outlook adds another dimension. It projects global 2026/27 production at 184.854 million tonnes, down from a record 186.056 million tonnes in 2025/26. At the same time, global human consumption is forecast to rise 0.4% to 179.991 million tonnes, while ending stocks are expected to increase 2% to 44.410 million tonnes.

The apparent contradiction is important: lower production does not necessarily mean an immediate shortage if starting inventories and ending-stock projections remain high. Traders will need to monitor revisions to production, consumption and stock estimates to establish whether the market is genuinely tightening.

Thailand and India: Weather Risks Could Tighten Future Supplies

Thailand is the world’s second-largest sugar exporter, making its production outlook particularly important for international availability.

The Thai Sugar Millers Corp has projected 2026/27 output falling 17% year-on-year to 10 million tonnes. The USDA’s Foreign Agricultural Service separately forecasts Thai production declining 15.6% to 9.5 million tonnes. The figures differ, but both point towards a potentially substantial reduction.

India faces its own production uncertainties. The USDA forecasts 2026/27 output falling 1.7% to 29.5 million tonnes. Earlier, the India Meteorological Department reported that cumulative monsoon rainfall from June to September was 12.6% below normal, the weakest in 11 years according to the supplied data.

Below-normal rainfall can affect cane growth and yields, although the eventual production impact depends on regional conditions, irrigation, soil moisture and subsequent weather.

India has also authorised up to 1 million tonnes of raw sugar imports without taxes through October 31, according to the supplied report. That is unusual for a country that is normally a major exporter and signals concerns over domestic supply availability. However, the extent to which import demand will affect global prices depends on the volume actually purchased and the timing of shipments.

El Niño Forecast: A Major Longer-Term Risk for Sugar Production

Weather remains one of the most important uncertainties in the global sugar outlook.

The supplied report cites elevated tropical Pacific sea-surface temperatures and forecasts indicating that El Niño could persist through the Northern Hemisphere winter and into the first quarter of the following year.

A strong El Niño can alter rainfall and temperature patterns across major producing regions. Potentially adverse conditions in Brazil, India and Thailand could affect cane yields, harvesting schedules and mill operations.

However, the production impact is not uniform or guaranteed. Regional rainfall patterns can differ, and the final effect on output will depend on the timing, duration and severity of weather conditions.

For sugar traders, the most useful signals will be measurable changes in rainfall, crop conditions, harvesting progress and production estimates rather than the El Niño forecast alone.

Market Outlook for the Coming Sessions

Sugar prices face near-term downside risks, but the longer-term supply picture remains uncertain.

The main developments to monitor are:

• India’s ethanol directive: Whether the policy change results in additional sugar production or export availability.
• Brazilian harvest progress: Whether drier weather accelerates crushing and increases near-term supplies.
• Fund positioning: Whether the substantial net-long position is maintained or begins to unwind.
• Global production forecasts: Whether the ISO, USDA and independent analysts revise their estimates as new data emerge.
• Thailand’s crop outlook: Whether lower production forecasts are confirmed by crop and harvest data.
• El Niño developments: Whether weather conditions begin to affect yields in major producing regions.
• Crude oil prices: Whether changes in energy prices influence the allocation of Brazilian cane between sugar and ethanol.
• Global inventories: Whether ending-stock projections begin to show a more meaningful tightening of available supply.

For the immediate sessions, the balance favours caution as improving Brazilian harvesting conditions and India’s ethanol policy increase the possibility of additional supply. However, a substantial fund long position could amplify price movements in either direction, while weather risks continue to complicate the longer-term outlook.

Currency Hedger View: Sugar Prices and International Trade Exposure

Sugar importers, food manufacturers, beverage producers and agricultural trading companies can face significant uncertainty when commodity prices and exchange rates move simultaneously.

International sugar purchases are commonly exposed to US-dollar pricing, while operating revenues may be earned in other currencies. A stronger dollar can therefore increase the local-currency cost of imports even when the underlying sugar price is stable or declining.

Businesses with recurring international purchases should assess commodity exposure alongside foreign-exchange risk. Suitable currency hedging arrangements may help provide greater certainty over future payment costs, depending on the currency pair, contract terms and business requirements. Such arrangements do not eliminate commodity-price risk.

Manage international currency exposure with Currency Hedger:

• Open a Currency Hedger account
• Visit Currency Hedger

Today Markets Analysis

Sugar prices are under pressure as India’s ethanol procurement change and improving Brazilian harvesting conditions raise the prospect of additional near-term supply. The declines in New York and London futures suggest traders are reassessing the balance between immediate availability and longer-term production risks.

The market’s longer-term outlook remains more complicated. The ISO projects a deficit for 2026/27, while other analysts anticipate a larger shortfall, and forecasts for Thailand and India point towards potentially lower output. At the same time, the USDA expects global ending stocks to increase, showing that the timing and severity of any shortage remain uncertain.

The key question is whether additional supply from India and Brazil will be sufficient to offset weather-related production risks elsewhere. Until new production and inventory data clarify that balance, sugar is likely to remain sensitive to policy changes, weather forecasts and fund positioning.

Market analysis by Today Markets, with international payment and currency exposure insights from Currency Hedger.

Risk Disclaimer: This material is provided for informational and educational purposes only and does not constitute investment advice, financial advice, or a recommendation to buy or sell any financial instrument. Sugar futures can be volatile, and leveraged trading can result in substantial losses. Forecasts and market scenarios are conditional and are not guarantees of future performance. Traders should conduct their own research and assess their risk tolerance before making investment decisions.