Sugar futures climbed sharply on Wednesday, reaching one-week highs, as a series of downward revisions to global supply forecasts reinforced expectations of a tightening market. July NY world sugar #11 (SBN26) settled up 0.37 cents, or 2.47%, while August London ICE white sugar #5 (SWQ26) gained 13.70, or 3.10%.
Why Forecasters Are Cutting Surplus Estimates
The rally was driven by fresh data from multiple agricultural consultancies. On Wednesday, Datagro raised its 2026/27 global sugar deficit estimate to 3.17 million metric tons (MMT), up from a prior forecast of 2.26 MMT. Just a day earlier, StoneX projected the global market would swing into a deficit of 550,000 MT during the 2026/27 season, compared with a 2.3 MMT surplus in the 2025/26 season.
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Citigroup added to the bearish supply narrative on Monday, forecasting Brazil’s 2026/27 sugar production at 39.50 MMT — well below the 43.95 MMT estimate from Brazil’s government crop agency Conab. The bank attributed the lower output to Brazilian mills diverting more sugarcane to ethanol production amid surging gasoline prices. Citigroup also warned that a potentially strong El Niño weather pattern could significantly impact sugar production in India and Thailand over the next 6 to 12 months.
Brazil’s Production Data Points to a Shift
Early-season data from Brazil’s Center-South region, the world’s largest sugar-producing area, already signals a production pullback. On April 30, Unica reported that sugar output in the first half of April fell 11.9% year-over-year to 647,000 MT, with mills allocating only 32.9% of crushed cane to sugar production — down from 44.7% a year earlier.
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Conab’s initial report for the 2026/27 season, released April 28, confirmed the trend, projecting a 0.5% decline in Brazilian sugar output to 43.952 MMT, while ethanol output is expected to climb 7.2% year-over-year to 29.259 billion liters. The USDA echoed this view on April 21, forecasting Brazil’s 2026/27 sugar production at 42.5 MMT, down 3% year-over-year, citing the same ethanol diversion dynamic.
Geopolitical and Trade Disruptions Add Pressure
Beyond production forecasts, sugar prices have found support from supply chain disruptions linked to the ongoing closure of the Strait of Hormuz. According to Covrig Analytics, the strait’s closure has curbed approximately 6% of global sugar trade, constraining refined sugar output. This adds a layer of geopolitical uncertainty to an already tightening fundamental picture.
On the demand side, India’s export policy remains a key variable. Last month, India’s Food Secretary stated that the government has no plans to ban sugar exports this year, easing fears that India might restrict shipments to prioritize ethanol production amid the Iran war disruption to crude oil supplies. In February, India approved an additional 500,000 MT of sugar for export for the 2025/26 season, on top of 1.5 MMT approved in November. The USDA expects India to post a sugar surplus of 2.5 MMT in 2026/27 — its first surplus in two years.
Broader Market Context
The shift toward a global deficit marks a notable reversal from recent years. The International Sugar Organization (ISO) reported a 1.22 MMT surplus in 2025/26, following a 3.46 MMT deficit in 2024/25. The ISO attributed the surplus to higher production in India, Thailand, and Pakistan, with global output rising 3.0% year-over-year to 181.3 MMT.
However, the rapid pace of downward revisions by multiple independent analysts suggests that the surplus window may be closing faster than anticipated. Covrig Analytics cut its 2026/27 global sugar surplus estimate to 800,000 MT from 1.4 MMT, while trader Czarnikow slashed its surplus forecast to 1.1 MMT from 3.4 MMT in February.
Conclusion
The convergence of lower Brazilian production, rising ethanol demand, potential El Niño disruptions, and geopolitical trade blockages has created a compelling supply-side narrative for sugar markets. While India’s export surplus offers some buffer, the rapid deterioration of global surplus forecasts suggests that sugar prices may remain supported in the near to medium term. Traders and end-users should monitor Brazil’s cane crush data and weather patterns in Asia closely over the coming months.
FAQs
Q1: Why are sugar prices rising?
Prices are rallying because multiple agricultural consultancies have cut their global sugar surplus forecasts for the 2026/27 season, citing lower production in Brazil and potential El Niño impacts in India and Thailand.
Q2: How is Brazil’s sugar production changing?
Brazil’s Center-South sugar output fell 11.9% year-over-year in the first half of April, as mills diverted more sugarcane to ethanol production. The USDA and Conab both project lower sugar output for the 2026/27 season.
Q3: Could El Niño affect sugar prices?
Yes. Citigroup warned that a potentially strong El Niño pattern could significantly impact sugar production in India and Thailand over the next 6 to 12 months, which could further tighten global supplies.
