Sugar Prices Stabilize after Monday’s Sell-off

March NY world sugar #11 (SBH27) is up +0.15 (+0.79%), and December London ICE white sugar #5 (SWZ26) is up +3.10 (+0.60%).

NY sugar prices today have stabilized after Monday’s -5.6% plunge to a 1-month low.  Sugar prices fell sharply on Monday as the Brazilian real plunged nearly -9% after President Luiz Inacio Lula da Silva surprised the markets by winning the weekend Brazilian presidential election for a fourth term. The Brazilian real recovered modestly by +1.2% today.

The drop in the Brazilian real encourages exporters to sell more sugar, as they can get a higher dollar price for their sales.  Brazil is the world’s largest sugar producer, accounting for about 24% of world sugar production and more than 50% of world sugar exports, according to the ICO and USDA.

Sugar saw support today after Covrig Analytics raised its global sugar deficit estimate for 2026/27 to 490,000 MT from its August forecast of 300,000 MT.  Covrig also tightened its 2025/26 balance to a smaller surplus of 1.2 MMT from 5.2 MMT due to lower Brazilian sugar production and larger sugar imports by India.

In a bullish factor, Unica reported last Friday that Brazil's Center-South sugar output fell -5.6% y/y in August to 7.089 MT.  Recent heavy rains in Brazil have disrupted harvesting and crushing. 

The Indian Sugar & Bio-Energy Manufacturers Association (ISMA) reported on Monday that India’s 2026/27 sugar season began on schedule, with nearly 107 sugar mills starting crushing operations.  ISMA reported that India’s sugar production so far in the 2026/27 season was 400,000 MT (through October 25), below 600,000 MT a year earlier.  ISMA said the 3.6 MMT sugar carry-over from the 2025/26 season means India has ample sugar availability and a comfortable supply position. India’s rainfall during the recent monsoon season (June-Sep) was 12.6% below normal, the weakest in 11 years.

Sugar prices have support from the developing Super-El Niño in the Pacific Ocean, which could disrupt rainfall in Brazil, India, and Thailand, the world’s three largest sugar-producing regions, thus cutting world sugar production.  Datagro on Monday predicted that Brazil’s Center-South Sugar output will fall -5% to 38.4 MMT in 2026-27 due to El Niño factors.

On August 20, India’s Directorate General of Foreign Trade said it would allow up to 1 MMT of raw sugar imports into the country tax-free until October 31, and on October 22 announced an extension to December 31. The move further signals the supply strain facing the global sugar market, as India is usually a sugar exporter and last imported sugar in substantial volumes during the 2017-18 season.

In a supportive factor for sugar prices, the International Sugar Organization (ISO) forecasts that global sugar production in 2026/27 will fall by -1% y/y to 180.1 MMT, causing a global sugar deficit of -200,000 MT, due to the potential negative impact of the El Niño weather pattern on harvests in India and Thailand.

Looking farther ahead, Czarnikow on August 14 predicted a 2027/28 global sugar deficit of -2.9 MMT as Brazil’s sugar mills produce more ethanol than sugar amid the recent surge in crude oil prices from the US-Iran war.  The group forecasts that 2027/28 global sugar production will fall -0.7% yr/yr to 177 MMT, driven mainly by weather disruptions in India, the EU, and Thailand.

The tighter forecasts for 2026/27 and 2027/28 follow a record year for sugar in 2025/26.  ISO pegs 2025/26 global sugar production at a record 182 MMT, up +3.5% y/y, and a 2025/26 global sugar surplus of 1.1 MMT. 

The USDA, in its biannual report released in May, projected that global 2026/27 sugar production would fall by -6.5% y/y to 184.854 MMT from a record 186.056 MMT in 2025/26.  Global 2026/27 human sugar consumption is expected to increase +0.4% y/y to a record 179.991 MMT.  The USDA also forecasts that 2026/27 global sugar ending stocks would increase by +2.0% y/y to 44.410 MMT.  The USDA’s Foreign Agricultural Service (FAS) predicted that Brazil’s 2026/27 sugar production would fall by -2.5% y/y to 42.2 MMT.  FAS predicted that India’s 2026/27 sugar production would fall by -1.7% y/y to 29.5 MMT, and that Thailand’s 2026/76 sugar production would fall by -15.6% y/y to 9.5 MMT.

On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.