International raw sugar rally hinges on production loss data from Brazil, India – Editorial by Uppal Shah
Raw sugar futures surged 13.9% from September 25 to October 2, reaching 19.93 cents/lb amid weather-related supply concerns. Brazil’s disrupted crushing and India’s weaker cane prospects support the rally, but analysts say sustained gains require confirmed production losses, while improved output could trigger a correction.
Raw sugar futures have rallied sharply on weather-related supply concerns, but the next leg of the price move will depend on whether production losses in Brazil and India materialise.
The rally extended over the past week, with ICE March 2027 No. 11 futures settling at 19.93 cents per pound on October 2, up 0.99 cent, or 5.23%, from the previous session. The contract touched an intraday high of 19.96 cents, also a 52-week high, after gaining 7.43% on October 1. It rose 13.9% from 17.50 cents on September 25, data from Investing.com showed.
The rally is partly supported by tightening supply expectations, although prices have moved ahead of confirmed fundamentals, said Rahil Shaikh, managing director of MIER Commodities.
The International Sugar Organization (ISO) has projected an initial global deficit of 2 lakh tonnes for 2026-27 and warned that any deterioration in production could widen the deficit significantly, ChiniMandi reported on September 2.
Weather concerns in Brazil, India and Thailand have added a premium to prices, but actual production losses remain uncertain.
“We need to distinguish between risk and realised production loss,” Shaikh said, identifying Brazil as the immediate supply concern. Excessive rainfall is disrupting harvesting and crushing, potentially affecting sugar recovery and output in the Center-South region.
The impact is already visible in Brazil’s production data. Sugar output in the Center-South fell 41.6% year-on-year to 2.12 million tonnes in the first half of September, while cane crushing declined 34.2% to 30.16 million tonnes, according to figures released by Brazil’s Ministry of Agriculture. Cumulative sugar production in the 2026-27 season through September 15 declined 14.4% to 26.07 million tonnes, while cane crushing fell 1.5% to 443.71 million tonnes. Brazil’s 2026-27 crushing season began on April 1.
Persistent wet conditions have also reduced sugar concentration in cane and disrupted mill operations. CNN Agro reported on September 25 that Datagro estimates more than 35 million tonnes of cane could remain unharvested in Brazil’s Center-South fields due to the wet conditions, potentially shifting part of the supply into the following season.
India is another significant risk for the next production cycle. The weak monsoon is threatening cane yields and recovery, while the impact should become clearer as crushing progresses in October and November, Shaikh said.
The West India Sugar Mills Association (WISMA) has projected that Maharashtra, the country’s second-largest sugarcane producer, could see sugar production decline by around 20% to nearly 80 lakh tonnes in 2026-27, from approximately 99 lakh tonnes in the previous season, ChiniMandi reported on September 21. WISMA chairman B. B. Thombre attributed the expected decline to deficient rainfall, lower cane tonnage and reduced sugar recovery. Thombre has also indicated that cane tonnage per acre could fall 30-40% this season despite relatively good planted area.
A Bloomberg survey of 11 traders, analysts and millers estimated India’s 2026-27 sugar production at 29-31 million tonnes, compared with the Indian Sugar and Bio-energy Manufacturers Association’s (ISMA) forecast of 31 million tonnes for the current season, Business Standard reported on September 11. ISMA is assessing the crop and expects a clearer production picture by the second or third week of October.
Thailand also remains an important factor in the global supply outlook, although recent rainfall has improved its crop prospects somewhat.
For international sugar prices to rise sustainably, Brazil’s production would need to decline further, while India would have to report weaker-than-expected cane yields and recovery. Disappointing Thai production and tighter physical availability could also support the rally, Shaikh said.
“The next leg higher needs proof in the production numbers,” Shaikh said.
Conversely, a recovery in Brazilian crushing, better-than-expected Indian production or stronger Thai output could trigger a correction. Liquidation of speculative positions without a corresponding deterioration in physical supply could add to downward pressure.
“The market has moved from trading a surplus story to trading a weather-risk story,” Shaikh said, adding that prices now depend increasingly on confirmation of weather-related production losses rather than forecasts alone.
The sharp rise in raw sugar futures has also created liquidity and margin-funding challenges for trade houses holding short hedges. While larger houses can use banking lines and stronger balance sheets to meet margin calls and manage physical positions, smaller desks may face immediate cash-flow pressure, Shaikh said.
Futures margins must be funded immediately, while returns from physical transactions may take considerably longer to materialise. This is creating pressure for market consolidation, although it does not necessarily mean smaller traders have taken fundamentally incorrect positions.
“In a market moving 100–200 points very quickly, balance-sheet capacity becomes almost as important as market knowledge,” Shaikh added.
For further inquiries please contact Uppal Shah, Editor-in-Chief, at uppal@chinimandi.com
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Source : ChiniMandi
