Sugar prices are strengthening sharply as adverse weather, tightening production expectations and a deteriorating global supply outlook encourage renewed fund buying. March NY world sugar #11 is trading around its highest level in 19 months, while London white sugar has reached a 1.5-month high.

The market is increasingly focused on the possibility that the global sugar balance could move from surplus into deficit during the 2026/27 season. Brazil, India and Thailand remain central to the outlook, with rainfall disruption, weaker production expectations and the growing risk of El Niño creating a more supportive environment for prices.

Market Snapshot

Market Factor	Current Situation	Market Impact
March NY Sugar #11	+4.01%	Strongly bullish
December London White Sugar #5	+3.03%	Strongly bullish
Brazil	Heavy rainfall disrupting harvesting and crushing	Bullish
Brazilian Real	Near a 4.5-month high	Bullish
2026/27 Global Balance	ISO sees 200,000 MT deficit	Bullish
Thailand	Production potentially down 17%	Bullish
India	Weakest monsoon in 11 years	Bullish
El Niño	Risk of major weather disruption	Bullish
2025/26 Global Balance	Record crop and 1.1 MMT surplus	Bearish longer term

Sugar Prices Break Higher

March NY world sugar #11 has advanced sharply and is trading around a 19-month nearest-futures high. December London ICE white sugar #5 has also moved firmly higher, reaching its strongest level in approximately six weeks.

The strength reflects more than technical buying. Fund positioning is increasingly responding to the possibility of tighter physical supply, particularly as weather disruption begins to affect Brazil’s harvest and crushing schedule.

The combination of supply concerns and a stronger Brazilian real is particularly important because Brazil remains the world’s largest sugar producer and exporter.

Brazil Weather Becomes a Key Supply Risk

Persistent rainfall across Brazil’s Center-South sugar-growing region is slowing harvesting and disrupting cane crushing at mills.

That creates two potential effects for the sugar market.

First, delayed harvesting can reduce the immediate flow of sugar into the export market. Second, prolonged adverse conditions can affect the quality and timing of the crop entering the processing system.

Brazil’s production outlook is therefore becoming an increasingly important price driver as the market looks ahead to the next global production cycle.

USDA expectations currently point to Brazilian 2026/27 sugar production falling around 3% year-on-year to 42.5 MMT.

Stronger Brazilian Real Adds Further Support

The Brazilian real has strengthened sharply against the US dollar and is trading around a 4.5-month high.

A stronger real can reduce the incentive for Brazilian producers to sell sugar into international markets because dollar-denominated export revenues translate into fewer reais.

This creates an additional layer of support for futures prices at a time when weather is already disrupting the physical supply chain.

If the real remains firm while Brazil’s harvest continues to experience delays, the combination could maintain upward pressure on sugar.

Global Deficit Risk Is Growing

The global sugar balance is becoming increasingly supportive.

The International Sugar Organization currently projects a 200,000 MT global sugar deficit for 2026/27, compared with a 1.1 MMT surplus in 2025/26.

Other analysts are also becoming more cautious about global availability.

Covrig Analytics has moved from expecting a surplus to forecasting a 300,000 MT deficit for 2026/27. StoneX has also significantly increased its projected deficit, while Czarnikow sees the potential for a much larger 2027/28 deficit of approximately 2.9 MMT.

The differing estimates highlight considerable uncertainty, but the direction of travel is becoming clearer: the market is moving away from the exceptionally comfortable supply conditions associated with the 2025/26 crop.

Thailand Faces Production Pressure

Thailand is another major concern.

The Thai Sugar Millers Corporation expects 2026/27 sugar production to potentially fall by around 17% year-on-year to approximately 10 MMT.

Thailand is the world’s second-largest sugar exporter, meaning a significant reduction in output could have an outsized impact on global export availability.

USDA estimates are also bearish for Thai production, projecting a decline of approximately 15.6% to 9.5 MMT.

A sustained reduction in Thai production would increase the importance of Brazil and other major exporters in meeting global demand.

India Weather Raises Additional Concerns

India is the world’s second-largest sugar producer, making its production outlook another critical component of the global balance.

India’s cumulative June-September monsoon rainfall was reported at 12.6% below normal by the end of September, representing the weakest monsoon performance in approximately 11 years.

The concern is particularly significant because sugar production depends heavily on sufficient rainfall during key stages of the growing cycle.

India has already taken steps that indicate tighter domestic supply conditions. Authorities have permitted up to 1 MMT of raw sugar imports without taxes through October 31.

India is normally a major sugar exporter, so the return to substantial import requirements would represent a meaningful change in the global supply picture.

El Niño Adds a Longer-Term Weather Risk

The potential development of a strong El Niño is becoming one of the most important forward-looking risks for the sugar market.

A significant El Niño could alter rainfall patterns across Brazil, India and Thailand — three of the world’s most important sugar-producing regions.

The US Climate Prediction Center has indicated that the El Niño pattern developing across the equatorial Pacific could become one of the strongest in more than seven decades.

For sugar traders, the concern is not simply lower production in one country. Simultaneous weather disruption across several major producers could materially tighten the global balance.

2025/26 Supply Still Provides a Cushion

Despite the increasingly bullish 2026/27 outlook, the current global supply situation is not yet structurally tight.

The ISO expects 2025/26 global sugar production to reach a record approximately 182 MMT, up 3.5% year-on-year.

The organization also expects a 1.1 MMT global surplus for the season, although this is substantially smaller than its previous 2.2 MMT estimate.

This creates an important distinction for the market: current inventories and production provide some protection against an immediate supply shortage, but the forward balance is becoming considerably tighter.

Global Production and Consumption Outlook

USDA forecasts global 2026/27 sugar production at approximately 184.854 MMT, down from 186.056 MMT in 2025/26.

At the same time, global human consumption is expected to increase around 0.4% to a record 179.991 MMT.

Global ending stocks are projected to rise approximately 2% to 44.410 MMT.

The inventory projection provides some downside protection against an immediate supply crisis, but it does not eliminate the risk that weather-related production losses could tighten the market more aggressively than current forecasts suggest.

Bullish Scenario

Sugar could extend its advance if:

• Brazil’s rainfall continues delaying harvesting and cane crushing.
• The Brazilian real remains strong.
• Thailand production falls toward or below 10 MMT.
• India’s weak monsoon reduces production expectations.
• El Niño develops into a major weather event.
• Global 2026/27 production estimates continue to decline.
• Fund buying accelerates following the recent technical breakout.
• The global deficit becomes larger than current forecasts.

A combination of production reductions across Brazil, India and Thailand could create a significantly tighter global market than current balance-sheet estimates imply.

Bearish Scenario

The main downside risks are:

• Brazil’s harvest accelerates as weather conditions improve.
• Global production remains closer to record levels.
• El Niño fails to produce significant agricultural disruption.
• India’s production recovers strongly.
• Thailand’s crop performs better than currently expected.
• Global inventories remain sufficient to meet consumption.
• Speculative buying becomes overextended and triggers profit-taking.

The 2025/26 record crop and existing global stocks remain important buffers against a sudden physical shortage.

Sugar Price Outlook

The technical and fundamental outlook has turned increasingly constructive.

The break to a 19-month high in NY sugar indicates that the market is beginning to price a more difficult supply environment. However, after such a rapid advance, periods of profit-taking and consolidation should be expected.

The key question is whether the market can maintain its gains after the initial weather premium has been established.

A sustained move higher would strengthen the case for the market to test progressively higher resistance levels, particularly if Brazil’s harvest remains disrupted and global deficit forecasts continue to expand.

Conversely, a significant improvement in Brazilian weather or evidence that India’s production will recover could trigger a correction.

Supply Outlook

Global supply is becoming more uncertain.

Brazil remains the largest source of exportable sugar, but delayed harvesting and weaker production expectations are creating immediate concerns.

Thailand is facing a potentially significant production decline, while India is dealing with weaker rainfall and has already authorised raw sugar imports.

The market therefore faces a potentially tighter 2026/27 supply balance despite relatively comfortable conditions during the current season.

Demand Outlook

Global sugar consumption continues to trend higher.

USDA expects 2026/27 human consumption to reach a record level, providing a stable underlying demand base.

Demand is unlikely to be the primary driver of the current rally, however. The market is increasingly being driven by the possibility that production will fail to keep pace with consumption as weather risks intensify.

Louis Roche Analysis

Sugar is moving into a fundamentally more interesting phase.

The important development is not simply that prices have rallied sharply. It is that several independent supply risks are beginning to point in the same direction.

Brazil is experiencing harvesting and crushing disruption, Thailand is facing lower production expectations, India has experienced a very weak monsoon and the potential for a major El Niño creates an additional risk across all three regions.

At the same time, the Brazilian real is strengthening, reducing the incentive for Brazilian producers to sell into the international market.

The 2025/26 record crop means the market is not facing an immediate shortage, but the transition toward a potential 2026/27 deficit is increasingly being priced into futures.

In my view, the critical factor from here is whether weather disruption becomes a temporary delay or a genuine production problem. If the latter develops across multiple producing countries, the current rally could represent the beginning rather than the end of a broader repricing of sugar.

Coming Sessions

Markets will focus on:

• Brazil’s Center-South harvesting and crushing pace.
• Brazilian weather forecasts.
• The Brazilian real and its impact on producer selling.
• El Niño development and rainfall patterns.
• India’s post-monsoon production outlook.
• Thailand’s crop expectations.
• Revisions to 2026/27 global production estimates.
• Fund positioning following the latest price breakout.
• Evidence of changes in global export availability.

Today Markets View

Today Markets maintains a cautiously bullish medium-term view on sugar.

The immediate rally is supported by genuine fundamental factors rather than technical momentum alone. Brazil’s weather disruption, a stronger Brazilian real and growing expectations of a 2026/27 global deficit are creating a more supportive environment.

However, the market has moved sharply and may become vulnerable to short-term profit-taking.

The key bullish signal would be continued deterioration in production expectations across Brazil, India and Thailand. If that occurs alongside stronger El Niño conditions, sugar could enter a substantially tighter supply environment.

Currency Hedger View

For international sugar producers, exporters and commercial buyers, the currency component is becoming increasingly important.

The stronger Brazilian real can reduce the attractiveness of export selling from Brazil, potentially reinforcing the impact of weather-related supply disruption on global sugar prices.

For businesses exposed to sugar purchases, exports or USD/BRL movements, managing the currency component alongside the underlying commodity exposure can become increasingly important as volatility rises.

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Contributor

Louis Roche – Today Markets

Market analysis prepared for Today Markets. For informational purposes only and not intended as investment, trading, financial or commodity advice.