ICE and NY futures for sugar surged on Tuesday, with New York world sugar and London ICE white sugar both posting sharp gains as traders moved to price tighter global supplies in the 2026/27 marketing year. Contract prices hit multi-week highs, supported by forecasts for larger-than-expected deficits and growing concern that monsoon and El Niño-linked weather risks could weigh on key production regions.
Key takeaways
- Prices jumped: October NY world sugar and October London ICE white sugar both rose on the session, with NY logging a three-week high and London a two-week high.
- Catalyst: Multiple commodity research groups raised their outlook for a global sugar deficit in 2026/27.
- Weather risk in focus: Warnings around India’s monsoon and the potential for El Niño disruptions added bullish pressure.
- Supply dynamics remain central: Reports that Brazil mills are shifting more cane toward ethanol reinforced the market’s tighter-supply narrative.
What drove the move
According to Covrig Analytics, the market is moving toward a smaller surplus—or deeper deficit—than previously expected. Covrig said it now forecasts a global sugar deficit in 2026/27 of -300,000 MT, reversing a June outlook for a +100,000 MT surplus.
Other research also contributed to the re-pricing of supply tightness. Green Pool Commodity Specialists raised its 2026/27 global deficit estimate to -3.3 MMT from a June estimate of -1.76 MMT. StoneX also lifted its 2026/27 deficit forecast to -1.7 MMT from a May estimate of -550,000 MT.
In addition to the deficit outlook, traders leaned on weather and production data pointing to increased uncertainty in supply. India’s meteorological authorities warned that August and September monsoon rainfall will likely be below normal. The report also cited concerns that this year’s monsoon could be the weakest in 11 years. While more recent readings showed improvement—India’s cumulative monsoon rainfall was reported at 12% below normal as of August 3, up from 42% below normal on June 30—the ongoing risk of dry spells kept support under futures.
El Niño-linked climate risks were another bullish factor. The US Climate Prediction Center said the El Niño pattern developing across the equatorial Pacific is likely to become one of the strongest in more than 75 years, with expectations that it could curb rainfall in Brazil, India, and Thailand—three of the world’s largest sugar-producing regions. India’s weather office reportedly lowered its cumulative rainfall estimate for the June–September monsoon season to 90% of the long-term average, down from a 92% forecast issued in April.
Market reaction and why traders are leaning bullish
Futures buyers appear to be focusing on the gap between current supply expectations and forward deficit forecasts for 2026/27. The day’s gains followed a broader trend of tightening supply narratives, in which deficit forecasts increasingly outweigh earlier projections of balance.
Brazil supply dynamics also played a role. According to Unica, Brazil Center-South sugar production through May in the 2026/27 season totaled 6.838 MMT, down 2.0% year over year, as millers increased ethanol output. The share of sugarcane used for sugar fell to 41.42% from 50.09%, while cane routed to ethanol rose to 58.38% from 49.91%.
Industry and brokerage estimates have also pointed to ethanol-driven substitution. Czarnikow reportedly reduced its global 2026/27 sugar balance estimate from a surplus of 1.4 MMT to a deficit of -100,000 MT, citing that Brazilian mills are producing more ethanol than sugar—linked, in part, to higher crude oil prices.
Earlier forecasts show how expectations are shifting
Several previously issued reports underline the magnitude of the change in the market’s direction. On April 28, Conab forecast Brazilian sugar output for 2026/27 would decline 0.5% to 43.952 MMT, alongside ethanol output rising 7.2% year over year to 29.259 million liters.
On the India side, ISMA reportedly revised its 2025/26 production estimate to 32 MMT from 32.4 MMT. It also projected 2025/26 sugar exports of 800,000 MT. India’s quota system for sugar exports—introduced after late rains reduced production in 2022/23—has remained a key policy factor for trade flows.
Looking ahead to 2026/27, the USDA projected a return to surplus in India, forecasting 2.5 MMT of sugar surplus, the first in two years, while also estimating broader global outcomes. In its May biannual view, the USDA projected global 2026/27 sugar production to fall 6.5% year over year to 184.854 MMT from 186.056 MMT in 2025/26. It also forecast global sugar ending stocks up 2.0% year over year to 44.410 MMT, and a 0.4% year-over-year rise in human sugar consumption to 179.991 MMT.
Still, other forward-looking views continue to diverge. The International Sugar Organization previously forecast a record global sugar crop for 2025/26, while for 2026/27 it projected global production to drop 1.15% year over year to 180 MMT alongside a -262,000 MT global deficit—citing El Niño’s potential impact on harvests in India and Thailand. StoneX and Covrig Analytics both moved their 2026/27 outlook in the direction of deficit risk as the market heads deeper into the season.
Bigger picture: what to watch next
With prices reacting to shifting deficit forecasts and weather uncertainty, traders are likely to keep a close watch on India’s monsoon trajectory and updated El Niño assessments. More immediate catalysts will include fresh production and harvest updates from Brazil and India, along with any further revisions to 2026/27 supply-demand balances from major agencies and commodity analysts.
