Sugar markets extended a week-long rally on Monday, with New York and London futures climbing to their highest levels in months amid mounting supply concerns.
October NY world sugar #11 (SBV26) rose +0.03, or +0.18%, while October London ICE white sugar #5 (SWV26) gained +4.20, or +0.83%, on the session.
NY sugar reached a 10-month nearest-futures high, while London sugar notched a 15-month high as traders priced in tightening global supplies.
European output is under severe pressure, with sugar production in the European Union and the UK forecast to fall to 14.98 MMT this year, the lowest level in 11 years, according to S&P Global Energy data.
Drought and hot weather across Europe are driving that decline, removing a significant volume of supply from an already strained global market.
Brazil, the world’s largest sugar-producing country, is adding further upward pressure after Unica reported that Brazil Center-South June sugar production fell 26.3% year-on-year to 3.903 MMT.
Multiple commodity analysts have dramatically revised their global balance sheets in recent weeks, with Covrig Analytics now forecasting a 2026/27 global sugar deficit of 300,000 MT, compared to a June forecast for a surplus of 100,000 MT.
Green Pool Commodity Specialists raised its 2026/27 global sugar deficit estimate to 3.3 MMT from a June figure of 1.76 MMT, while StoneX lifted its own deficit forecast to 1.7 MMT from a May estimate of just 550,000 MT.
India, the world’s second-largest sugar producer, faces its own weather crisis, with India’s Meteorological Department warning that monsoon rainfall during August and September “will likely be below normal.”
India’s Earth Science Ministry has cautioned that this year’s monsoon could be the weakest in 11 years, a development that threatens to significantly curtail cane yields in the critical June-to-September growing window.
Cumulative monsoon rainfall in India stood 12% below normal as of August 10, though that figure represented a marked improvement from a 42% shortfall recorded on June 30.
The potential emergence of a powerful El Nino weather pattern is amplifying fears across all three of the world’s largest sugar-producing regions, with Brazil, India, and Thailand all at risk of reduced rainfall.
The US Climate Prediction Center said on July 8 that the El Nino pattern that emerged across the equatorial Pacific is likely to be one of the strongest in more than 75 years.
Sugar trader Czarnikow cut its 2026/27 global sugar balance estimate from a surplus of 1.4 MMT to a deficit of 100,000 MT on June 11, citing Brazilian sugar mills diverting output toward ethanol amid rising crude oil prices linked to the US-Iran war.
Brazil’s national crop agency Conab projected in April that 2026/27 Brazilian sugar output will decline 0.5% to 43.952 MMT, while ethanol production climbs 7.2% year-on-year to 29.259 million liters.
The International Sugar Organization forecast a record global sugar crop of 182 MMT for 2025/26, up 3.5% year-on-year, but warned that 2026/27 production would fall 1.15% to 180 MMT with a deficit of 262,000 MT due to El Nino risks in India and Thailand.
The USDA projected that global 2026/27 sugar production would fall 6.5% year-on-year to 184.854 MMT, while human sugar consumption is expected to rise 0.4% to a record 179.991 MMT, tightening the balance sheet considerably.
Thailand’s output faces one of the steepest projected declines, with the USDA’s Foreign Agricultural Service predicting a 15.6% year-on-year drop to 9.5 MMT for 2026/27, underscoring how broadly the weather threat is being felt across global producing regions.
