October NY world sugar #11 (SBV26) fell -0.59, or -3.28%, while December London ICE white sugar #5 (SWZ26) dropped -15.90, or -3.03%, as prices extended a week-long slide.

Sugar prices tumbled to three-week lows Thursday, driven by mounting demand concerns following one of the largest October contract deliveries on record.

A total of 499,350 metric tons of sugar was delivered against the October London sugar contract that expired Tuesday, a figure up 91% year-over-year and a historic signal of weak physical demand.

Excessive long positions held by commodity funds are adding further pressure, with the potential to sharpen any long liquidation selloff in sugar futures markets.

Last Friday’s weekly Commitment of Traders report showed funds boosted their long NY sugar positions by 28,055 net long positions in the week ended September 8, reaching 160,551, the most in nearly three years.

The selloff comes just days after NY sugar posted a 17-month high and London sugar hit a 3-week high, both driven by expectations of a tightening global supply balance.

The International Sugar Organization projected a 2026/27 global sugar deficit of -200,000 MT, compared to a projected surplus of 1.1 MMT for the 2025/26 season.

StoneX raised its 2026/27 global sugar deficit forecast to -1.7 MMT from a May estimate of -550,000 MT, citing Brazil’s shift toward ethanol production amid surging crude oil prices linked to the US-Iran war.

Czarnikow predicted a 2027/28 global sugar deficit of -2.9 MMT, forecasting that global sugar production will fall -0.7% year-over-year to 177 MMT due to weather disruptions in India, the EU, and Thailand.

Thailand’s Thai Sugar Millers Corp projected that 2026/27 sugar production could fall -17% year-over-year to 10 MMT, a significant concern given that Thailand is the world’s second-largest sugar exporter.

India’s Earth Science Ministry warned that this year’s monsoon could be the weakest in 11 years, with cumulative monsoon rainfall running 15% below normal as of September 16, according to India’s Meteorological Department.

India’s Directorate General of Foreign Trade announced it will allow up to 1 MMT of raw sugar imports free of taxes until October 31, an unusual move for a country that is typically a net sugar exporter.

Brazil, the world’s largest sugar producer, saw its Center-South June sugar production fall -26.3% year-over-year to 3.903 MMT, according to Unica’s August report, adding a bullish supply-side dimension to the longer-term outlook.

The US Climate Prediction Center warned in July that the El Nino weather pattern that emerged across the equatorial Pacific is likely to be one of the strongest in more than 75 years, raising the prospect of further crop disruptions.

The USDA projected that global 2026/27 sugar production would fall 6.5% year-over-year to 184.854 MMT, while global human sugar consumption is expected to rise 0.4% to a record 179.991 MMT, keeping supply-demand dynamics tightly balanced.