New York and London sugar futures extended their declines on Wednesday, with both markets coming under pressure from continued long liquidation, expectations for increased Indian sugar availability and improving prospects for Brazil’s sugar harvest. March 2027 New York Sugar No. 11 futures fell 0.07 cents, or 0.34%, while December 2026 London white sugar declined $3.40, or 0.62%.
The latest losses follow a strong rally over the previous month, during which New York sugar reached a 19-month nearest-futures high and London sugar climbed to a 22-month high. Earlier concerns about excessive rainfall in Brazil’s Center-South region had disrupted harvesting and cane crushing, tightening near-term supply expectations. Forecasts for hotter, drier weather have now raised the prospect of improved harvesting conditions and renewed production flows.
India’s decision to stop state-owned fuel retailers from procuring ethanol made from sugarcane from November 1 has added to the bearish pressure, as more cane could potentially be directed towards sugar production. However, the longer-term outlook remains uncertain, with forecasts for a global sugar deficit in 2026/27, lower output in major producing countries and the potential effects of a strong El Niño weather pattern providing underlying support.
Sugar Market Snapshot
| Market Indicator | Latest Reported Position |
|---|---|
| March 2027 New York Sugar No. 11 | Lower by 0.07 cents, or 0.34% |
| December 2026 London White Sugar No. 5 | Lower by $3.40, or 0.62% |
| Recent Market Trend | Fourth consecutive daily decline in New York sugar |
| Speculative Positioning | Funds net long 228,743 New York sugar contracts |
| Fund Position Change | Increased by 16,184 contracts in the week ended October 13 |
| India Ethanol Policy | State-owned fuel retailers to stop procuring sugarcane-based ethanol from November 1 |
| Brazil Harvest Outlook | Hotter, drier conditions may accelerate harvesting and crushing |
| ISO 2025/26 Sugar Balance | Forecast surplus of 1.1 million metric tonnes |
| ISO 2026/27 Sugar Balance | Forecast deficit of 200,000 metric tonnes |
| Thailand 2026/27 Production | Forecast declines of approximately 15.6%–17%, depending on source |
| Key Bullish Risk | El Niño-related disruption to production in major growing regions |
| Key Bearish Risk | Improved harvest progress and potentially greater sugar availability |
Current Price Action: Sugar Futures Extend Their Decline
New York sugar futures fell for a fourth consecutive session on Wednesday as traders continued to reduce positions following the market’s recent rally.
March 2027 Sugar No. 11 futures declined 0.07 cents, equivalent to 0.34%. December 2026 London white sugar fell $3.40, or 0.62%.
The selling pressure follows a substantial recovery in prices over the previous month. New York sugar reached a 19-month nearest-futures high last Wednesday, while London sugar recorded a 22-month high on October 7.
That earlier rally was supported by heavy rainfall in Brazil’s Center-South region, which slowed harvesting and disrupted cane crushing at sugar mills. Reduced processing activity raised concerns about near-term sugar availability.
The market is now reassessing that supply risk as weather forecasts point towards hotter, drier conditions in Brazil. If harvesting and crushing operations return to a faster pace, the additional flow of sugar could ease some of the tightness that supported the recent rally.
For now, the market is caught between short-term bearish developments and a longer-term outlook that still includes the possibility of a global production deficit.
Speculative Positioning: Large Fund Longs Add to Liquidation Pressure
Commodity fund positioning is contributing to the recent decline in sugar prices.
The latest weekly Commitment of Traders report showed that funds increased their net long position in New York sugar futures by 16,184 contracts during the week ended October 13, bringing the net long position to 228,743 contracts.
That was the largest net long position in more than five years, according to the supplied market report.
A substantial net long position can support prices while investors continue buying. However, it can also leave the market vulnerable to selling when sentiment changes or traders begin locking in profits.
The recent four-session decline suggests that liquidation pressure is becoming an important short-term factor. If funds continue reducing their exposure, prices could remain under pressure even if the longer-term supply outlook remains supportive.
Conversely, stabilisation in prices could encourage investors to retain their positions if concerns over global production and weather-related risks return to the forefront.
India’s Ethanol Policy Shift Could Increase Sugar Availability
India’s decision to instruct state-owned fuel retailers to stop procuring ethanol made from sugarcane from November 1 has added a new source of downward pressure to the sugar market.
The policy change could alter the allocation of sugarcane between ethanol and sugar production. If more cane is processed into sugar instead of being used for ethanol, domestic sugar availability could increase.
The potential effect is significant because India is one of the world’s largest sugar-producing countries and plays an important role in global trade.
However, the actual impact will depend on how sugar mills respond, how much cane is redirected and whether other policy measures or production constraints limit the additional output available to the market.
India has also faced weather-related challenges. The country’s Meteorological Department reported that cumulative monsoon rainfall from June through September was 12.6% below normal as of September 30, the weakest monsoon performance in 11 years according to the supplied report.
The interaction between ethanol policy and agricultural conditions will therefore be crucial. A shift towards sugar production could increase availability, but weaker crop yields could offset part of that effect.
Brazil Weather Outlook: Drier Conditions Could Accelerate Harvesting
Brazil’s Center-South region remains a major focus for sugar traders because it is the country’s largest sugar-producing area.
Earlier rainfall slowed harvesting and disrupted cane crushing at mills, reducing the pace at which sugar was being processed. Those disruptions helped fuel the rally in futures over the previous month.
Forecasts for hot, dry weather this week have shifted the near-term outlook. Drier conditions could allow harvesting operations to accelerate and mills to resume crushing at a faster pace, increasing the supply of sugar entering the market.
This creates a potential bearish catalyst after the recent rally.
However, the effect of dry weather is not uniformly negative or positive for production. In the immediate term, drier conditions can improve harvesting access and processing efficiency. If prolonged, excessive heat and insufficient rainfall can also damage crops and reduce future yields.
The key distinction for traders is between weather that improves current harvesting operations and weather that ultimately harms crop development.
If the current forecast primarily improves field access and crushing activity, prices could face additional downward pressure. If dry conditions persist long enough to damage cane yields, the longer-term supply outlook could become more supportive.
Global Sugar Balance: Deficit Forecasts Provide Longer-Term Support
Despite recent price declines, several industry forecasts point to a tighter global sugar balance in 2026/27.
The International Sugar Organization projected a global deficit of 200,000 metric tonnes for 2026/27 on September 1, compared with a forecast surplus of 1.1 million tonnes for 2025/26.
The ISO also expects global sugar production to decline by 1% year on year to 180.1 million tonnes in 2026/27, citing potential El Niño-related effects on harvests in India and Thailand.
Other estimates differ substantially:
- StoneX: Raised its 2026/27 global sugar deficit forecast to 1.7 million tonnes in August, from a deficit estimate of 550,000 tonnes in May.
- Covrig Analytics: Revised its 2026/27 outlook in August to a deficit of 300,000 tonnes, compared with an earlier forecast for a surplus of 100,000 tonnes.
- Czarnikow: Forecast a 2.9-million-tonne global deficit for 2027/28, with lower output linked to weather disruptions and the potential allocation of more Brazilian cane to ethanol production.
These projections indicate that some analysts expect the global balance to tighten, although the estimates vary significantly in both scale and timing.
The difference between the forecasts highlights the uncertainty surrounding production, consumption, weather and the allocation of sugarcane between sugar and ethanol.
2025/26 Sugar Surplus: Record Production Limits the Near-Term Outlook
The ISO expects global sugar production to reach a record 182 million tonnes in 2025/26, representing a 3.5% annual increase. It forecasts a global surplus of 1.1 million tonnes, down from its earlier May estimate of 2.2 million tonnes.
That projected surplus represents a recovery from the reported deficit of 3.46 million tonnes in 2024/25.
The prospect of a surplus in 2025/26 creates a counterweight to expectations for a deficit in the following season. If production remains strong and inventories are sufficient, the market may have less immediate need to price in future supply shortages.
The ISO’s outlook nevertheless points to a transition towards lower production and a tighter balance in 2026/27.
For traders, the timing of that transition is important. Near-term prices may remain under pressure from improved supply expectations and speculative liquidation, even if the longer-term balance becomes more supportive.
India Sugar Production and Import Policy
India’s production outlook remains a critical factor in the global market.
The Indian Sugar and Bio-energy Manufacturers Association revised its 2025/26 sugar production forecast to 32 million tonnes in April, down from 32.4 million tonnes previously. It also projected exports of 800,000 tonnes for the season.
India introduced a sugar export quota system in 2022/23 after late rainfall reduced production and constrained domestic supplies.
Separately, India’s Directorate General of Foreign Trade announced on August 20 that it would permit up to 1 million tonnes of raw sugar imports without taxes until October 31.
The import allowance was notable because India is normally a sugar exporter and had not imported substantial volumes since the 2017/18 season, according to the supplied report.
These developments point to the sensitivity of India’s sugar balance to weather, domestic availability and government policy.
The current ethanol decision could increase the quantity of sugar produced from available cane, but the effect on exports will depend on domestic consumption, crop output and the government’s approach to domestic supply security.
Thailand Production Risks: Lower Output Could Tighten Export Availability
Thailand is another major influence on the global sugar balance, ranking as the world’s second-largest sugar exporter.
The Thai Sugar Millers Corp projected on September 7 that 2026/27 sugar production could decline by 17% year on year to 10 million tonnes.
The USDA Foreign Agricultural Service separately projected a 15.6% annual decline to 9.5 million tonnes for 2026/27.
Although the forecasts differ in their precise estimates, both point towards a substantial reduction in production.
Lower Thai output could reduce export availability and intensify competition among international buyers, particularly if production also weakens in Brazil and India.
The extent of the impact will depend on actual crop conditions, weather developments and how much sugar remains available for export after domestic requirements are met.
El Niño Threat: Weather Could Disrupt Sugar Production Across Major Regions
The potential development of a strong El Niño weather pattern is one of the major longer-term risks facing the global sugar market.
The supplied report cites observations from Japan’s Meteorological Agency showing tropical Pacific surface temperatures approximately 4°C above normal as of September, described as the highest on record since 1949. The agency forecast that El Niño would persist through the Northern Hemisphere winter and into the first quarter of the following year.
The US Climate Prediction Center also warned that the developing pattern could become one of the strongest in more than 75 years.
El Niño can alter rainfall patterns and temperatures across agricultural regions. For sugar, the potential consequences include drought, flooding, heat stress and disruption to crop development.
Brazil, India and Thailand are particularly important because they are among the world’s largest sugar-producing countries.
If adverse weather reduces cane yields or disrupts harvesting, global production could fall below expectations and tighten supplies. However, the precise effects depend on regional weather patterns and the timing of rainfall relative to crop development.
The market is therefore balancing near-term expectations for improved Brazilian harvesting against longer-term concerns that El Niño could damage production across multiple regions.
USDA Sugar Outlook: Lower Production but Higher Ending Stocks
The USDA’s May biannual report projected that global sugar production would decline by 6.5% year on year in 2026/27 to 184.854 million tonnes, compared with a record 186.056 million tonnes in 2025/26.
The report also projected that global human sugar consumption would increase by 0.4% year on year to a record 179.991 million tonnes.
Despite the expected production decline and higher consumption, the USDA forecast global ending stocks to rise by 2% to 44.410 million tonnes in 2026/27.
Its country-level forecasts included:
| Region | USDA FAS 2026/27 Forecast |
|---|---|
| Brazil | Production down 2.5% year on year to 42.2 million tonnes |
| India | Production down 1.7% year on year to 29.5 million tonnes |
| Thailand | Production down 15.6% year on year to 9.5 million tonnes |
| Global Consumption | Up 0.4% year on year to 179.991 million tonnes |
| Global Ending Stocks | Up 2% year on year to 44.410 million tonnes |
These figures illustrate the uncertainty in the market outlook. While production is forecast to decline, ending stocks are still expected to increase, suggesting that the global balance may remain more comfortable than some deficit forecasts imply.
The USDA projections also differ from other industry estimates, underlining the importance of monitoring revisions as updated production and consumption data become available.
Bullish Sentiment: Factors Supporting Sugar Prices
- Potential global deficit in 2026/27: The ISO projects a 200,000-tonne deficit, while StoneX and Covrig Analytics also forecast deficits, although their estimates differ.
- El Niño production risks: Adverse weather could reduce cane yields and disrupt output in Brazil, India and Thailand.
- Lower Thai production forecasts: Estimates point to a substantial annual decline in Thai output, potentially reducing export availability.
- Potential weakness in Brazilian production: The USDA FAS forecasts a 2.5% annual decline in Brazil’s 2026/27 sugar production.
- Strong consumption outlook: The USDA projects record global human sugar consumption in 2026/27.
- Recent supply disruptions: Earlier rainfall in Brazil slowed harvesting and cane crushing, demonstrating how weather can quickly affect market availability.
- Potential diversion of Brazilian cane to ethanol: Higher ethanol production at the expense of sugar could reduce sugar output if energy-market incentives favour biofuel production.
Bearish Sentiment: Factors Weighing on Sugar Prices
- Four consecutive sessions of declines: New York sugar has continued to fall as traders reduce exposure after the recent rally.
- Large speculative long position: Funds held a net long position of 228,743 contracts, leaving scope for further liquidation.
- India’s ethanol policy shift: Ending sugarcane-based ethanol procurement by state-owned fuel retailers could encourage more cane to be used for sugar production.
- Improving Brazilian harvesting conditions: Hotter, drier weather could allow harvesting and crushing to accelerate, increasing near-term sugar availability.
- Projected 2025/26 global surplus: The ISO expects a surplus of 1.1 million tonnes following record production.
- USDA forecast for higher ending stocks: Projected global stocks of 44.410 million tonnes in 2026/27 could limit concerns over immediate scarcity.
- Divergent production estimates: Some forecasts imply a tighter balance than others, creating uncertainty about the scale of any prospective deficit.
Sugar Price Forecast: What Traders Are Watching
Sugar prices are facing opposing forces. Near-term selling pressure is being driven by speculative liquidation, India’s ethanol policy change and expectations for faster Brazilian harvesting. Longer-term support comes from potential production declines, weather risks and forecasts for a global deficit.
Bullish Scenario
Sugar prices could recover if El Niño-related weather risks intensify, Brazil’s production outlook deteriorates or lower output in India and Thailand tightens global availability.
Further evidence that 2026/27 production will fall short of consumption could restore buying interest, particularly if funds reduce their short-term selling and begin rebuilding positions.
Bearish Scenario
Prices could remain under pressure if Brazil’s harvest accelerates, more Indian cane is allocated to sugar production and fund liquidation continues.
The projected 2025/26 global surplus and the USDA’s forecast for higher 2026/27 ending stocks could also limit the urgency for buyers to secure supplies at higher prices.
Consolidation Scenario
Sugar futures could stabilise if near-term supply improvements are offset by continued concern over the 2026/27 global balance.
Under this scenario, traders will focus on Brazilian harvesting and crushing data, Indian policy implementation, fund positioning and updated forecasts from major sugar analysts.
The supplied data establish the direction and percentage changes of Wednesday’s futures settlements but do not provide the exact closing prices in cents per pound. Specific technical support and resistance levels therefore cannot be established from this report alone.
Global Sugar Supply Outlook
The global sugar supply outlook is increasingly divided between near-term availability and the risk of tighter production in the next season.
For 2025/26, the ISO expects record production and a global surplus. This should provide some near-term protection against shortages, although the projected surplus is smaller than its earlier estimate.
For 2026/27, the ISO forecasts lower production and a modest deficit, while StoneX and Covrig Analytics anticipate a tighter balance. The USDA, meanwhile, expects ending stocks to increase, illustrating the uncertainty surrounding the size of the global supply cushion.
Brazil’s harvesting pace will be particularly important over the coming sessions. Improved weather could increase the flow of sugar into the market, while prolonged dry conditions could ultimately affect crop development and future output.
India’s ethanol policy and Thailand’s production outlook will also influence the amount of sugar available for domestic use and international trade.
Global Sugar Demand Outlook
Global sugar demand is expected to remain a key determinant of whether the market moves towards a deficit.
The USDA projects 2026/27 human sugar consumption to increase by 0.4% year on year to a record 179.991 million tonnes.
If demand follows this trajectory while production declines, the global balance could tighten. However, higher ending stocks in the USDA outlook suggest that available inventories may continue to provide a buffer.
Demand conditions must therefore be assessed alongside production and stocks rather than in isolation.
For traders, the most important question is whether consumption growth will absorb the additional supply expected in the current season and offset the production declines projected for 2026/27.
Market Outlook for the Coming Sessions
Sugar futures remain under pressure following four consecutive daily declines in New York, with speculative long liquidation and expectations for increased near-term supply weighing on prices.
India’s decision to halt sugarcane-based ethanol procurement by state-owned fuel retailers from November 1 could increase sugar availability if mills redirect more cane towards sugar production. At the same time, improved weather in Brazil’s Center-South region could accelerate harvesting and crushing.
These bearish factors are being counterbalanced by forecasts for lower production in major growing regions and the potential impact of a strong El Niño on global crop yields.
The market’s direction will depend on whether near-term supply improvements outweigh the risk of a tighter global balance in 2026/27. Brazilian harvest progress, Indian policy implementation, fund positioning and revisions to production forecasts will be central to that assessment.
Today Markets Analysis
Sugar prices are correcting after a strong rally, with long liquidation, India’s ethanol policy shift and improving Brazilian harvesting prospects driving near-term selling pressure.
The large speculative net long position leaves the market vulnerable to further liquidation, particularly if improved weather allows Brazil’s mills to increase crushing activity and Indian policy changes encourage greater sugar production.
However, the longer-term supply outlook remains uncertain. The ISO and several private analysts forecast a global deficit in 2026/27, while lower production expectations for Thailand and potential El Niño disruption could tighten supplies.
The USDA’s forecast for higher ending stocks provides a counterpoint, highlighting the considerable uncertainty surrounding the global balance.
For the coming sessions, traders should distinguish between short-term availability and the next season’s production outlook. Faster harvesting and continued fund selling could extend the correction, while renewed evidence of weather-related production losses could restore upward pressure.
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Disclaimer
This article is provided for general information and market analysis purposes only and does not constitute financial advice, investment advice or a recommendation to buy or sell any financial instrument. Commodity futures trading involves significant risk and may not be suitable for all investors.
Market forecasts and scenarios are conditional and may change as new weather, production, inventory, policy and demand information becomes available. Production estimates from different organisations may vary because of differences in assumptions and methodologies. Readers should conduct independent research and consider their financial circumstances and risk tolerance before making trading or hedging decisions.
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