Global sugar prices rebound on higher crude oil, short covering; supply concerns persist
Global sugar prices rebounded on Wednesday as higher crude oil prices and short covering supported futures, while Brazilian weather disruptions raised supply concerns. However, stronger Indian output, currency-driven export prospects and mixed global production forecasts continue to influence market expectations for 2026-27.
Global sugar prices closed sharply higher on Wednesday, supported by a rise in crude oil prices and short covering in sugar futures. A 1% increase in West Texas Intermediate (WTI) crude oil prices strengthened expectations that higher energy prices could encourage sugar mills in major producing countries to divert more sugarcane towards ethanol production, reducing sugar supplies in the global market, barchart reported.
The rebound followed a decline in New York sugar futures to a six-week low on Tuesday. The earlier weakness was driven by a sharp fall in the Brazilian real against the US dollar, which raised expectations of increased sugar exports from Brazil.
A weaker Brazilian real makes dollar-denominated sugar exports more attractive to Brazilian producers, potentially increasing export supplies. Brazil accounts for around 23% of global sugar production and more than 50% of world sugar exports, according to the US Department of Agriculture (USDA).
Higher Indian production weighs on global prices
Global sugar prices have also faced pressure from expectations of higher sugar production in India during the 2026-27 season.
According to the Indian Sugar and Bio-Energy Manufacturers Association (ISMA), India’s sugar production between October 1 and November 5 reached 1.29 million tonnes (MT), nearly four times the 3.20 lakh tonnes produced during the corresponding period last year.
As many as 184 sugar mills were operational on November 5, compared with 154 mills during the same period last season. India is the world’s second-largest sugar producer, and higher output could add to global supplies.
Brazilian production affected by weather conditions
Weather-related disruptions in Brazil have provided some support to global sugar prices. Persistent El Niño-related rainfall has slowed sugarcane harvesting and crushing operations in the country.
Brazilian sugar mills crushed 32 million tonnes of sugarcane during the first half of October, down 18% from 39 million tonnes in the corresponding period last year.
Sugar production during the first half of October declined 23% year-on-year to 2.15 million tonnes, according to the Brazilian authorities.
Global sugar deficit estimates revised higher
Supply concerns have prompted some international analysts to revise their global sugar balance estimates.
Covrig Analytics, on October 27, increased its projected global sugar deficit for 2026-27 to 490,000 tonnes from its earlier estimate of 300,000 tonnes announced in August.
The agency also revised its assessment of the 2025-26 global sugar balance, lowering the estimated surplus to 1.2 million tonnes from 5.2 million tonnes. The revision reflects lower Brazilian sugar production and higher sugar imports by India.
The developing El Niño weather pattern is another factor influencing market expectations. Changes in rainfall patterns could affect sugarcane production in Brazil, India and Thailand, the world’s three largest sugar-producing countries.
India received 12.6% below-normal rainfall during the June-September 2026 monsoon season, marking its weakest monsoon performance in 11 years.
India’s decision to extend duty-free sugar imports
India’s decision to extend the deadline for duty-free raw sugar imports has also highlighted concerns over domestic supply availability.
On August 20, the Directorate General of Foreign Trade (DGFT) permitted imports of up to one million tonnes of raw sugar without customs duty until October 31. On October 22, the government extended the deadline to December 31.
India is traditionally a sugar-exporting country, and the decision to permit substantial duty-free imports is significant, as the country last imported sugar in large quantities during the 2017-18 season.
The move has added to market concerns over the availability of sugar supplies in the domestic and international markets.
ISO projects lower global production in 2026-27
The International Sugar Organization (ISO) expects global sugar production to decline by 1% year-on-year to 180.1 million tonnes in 2026-27. It projects a global supply deficit of 200,000 tonnes, citing the potential impact of El Niño on sugarcane production in India and Thailand.
Looking further ahead, Czarnikow has projected a global sugar deficit of 2.9 million tonnes for the 2027-28 season.
The organisation expects global sugar production to decline by 0.7% year-on-year to 177 million tonnes, mainly due to weather-related disruptions in India, the European Union and Thailand. It also expects higher crude oil prices to encourage Brazilian mills to allocate more sugarcane towards ethanol production rather than sugar.
USDA forecasts lower production in major sugar-producing countries
The latest projections from the USDA also point towards lower global sugar production in 2026-27.
In its biannual report released in May, the USDA projected global sugar production at 184.854 million tonnes, down 6.5% from the record 186.056 million tonnes estimated for 2025-26.
Global human sugar consumption is expected to increase by 0.4% year-on-year to a record 179.991 million tonnes. However, global ending stocks are projected to rise by 2% to 44.410 million tonnes.
The USDA’s Foreign Agricultural Service (FAS) expects Brazil’s sugar production to decline by 2.5% to 42.2 million tonnes in 2026-27. India’s production is projected to fall by 1.7% to 29.5 million tonnes, while Thailand’s output is expected to decline by 15.6% to 9.5 million tonnes.
The contrasting production estimates, weather-related uncertainties and changing crude oil prices are likely to influence global sugar market movements in the coming months. While higher crude oil prices could improve the economics of ethanol production and encourage mills to reduce sugar output, increased Indian production and the pace of Brazilian exports will remain important factors determining global sugar prices.
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Source : ChiniMandi
