Sugar Retreats Toward 20 Cents Despite India and Brazil Crop Cuts (8 October 2026)

Sugar futures fell sharply on Thursday, reversing much of Monday’s advance even as crop forecasts continued to highlight supply risks. New York March 2027 raw sugar settled at 20.15 cents/lb, down 0.68 cent or 3.26%, after trading between 20.09 and 21.03. London December white sugar lost $14.60, or 2.63%, to $541.10/t, within a $539.10–563.10 range.

Both contracts finished close to their session lows. March raws settled 0.06 cent above the low and below Wednesday’s 20.17-cent trough. December whites finished $2.00/t above their low, although Thursday’s entire range remained inside Wednesday’s wider range. The raw market therefore weakened more decisively against the previous session’s price boundaries.

Nearby calendar spreads also softened. March’s raw-sugar premium over May narrowed to 0.78 cent/lb from 0.86, while December’s white-sugar discount to March widened to $10.90/t from $10.00. However, the matched March white-over-raw premium increased $1.29 to $107.77/t as raws fell more heavily. That relative resilience in whites did not prevent a decline in outright prices.

Raw-sugar volume fell 33.20% to 155,507 contracts; white-sugar turnover declined 27.27% to 27,698. The latest confirmed open interest is for Wednesday, 7 October: raws rose 1,210 contracts to 1,160,154 and whites increased 915 to 157,688. Thursday’s open interest remains unavailable, so the selloff cannot yet be distinguished between net position reduction and an expansion in outstanding exposure.

India faces a substantially smaller sugar crop

Reuters reported on Thursday that USDA’s Foreign Agricultural Service post in New Delhi had lowered its 2026/27 sugar forecast to 29.5 million tonnes from 33.6 million, a reduction of 4.1 million tonnes, or 12.2%. Cane production is projected at 434 million tonnes, compared with 455 million in the previous season. Rainfall deficits are expected to reduce sucrose content and effective harvesting area, while water shortages could complicate milling in early 2027.

The scale of the downgrade leaves less room to accommodate domestic consumption, ethanol diversion and exports simultaneously. The eventual trade requirement will depend on opening stocks, actual recovery and government decisions on ethanol and imports. The forecast alone does not establish a new import order or quota.

Brazil has more cane but less recoverable sugar this season

Reuters also reported that FAS Brasília reduced its Brazilian sugar-production forecast to 42.2 million tonnes from 42.5 million for the April-start 2026/27 season. At the same time, it raised the cane estimate to 695 million tonnes from 675 million. Irregular August and September rainfall delayed crushing, and some cane is expected to remain unharvested until the following crop.

The combination highlights the difference between standing cane and sugar delivered by mills. More agricultural tonnage does not guarantee more current-season sugar when field access and processing time constrain its recovery. Carryover could support the next campaign while limiting availability during the remainder of this one.

StoneX sees tighter early 2027 supply and a larger subsequent Brazilian crop

StoneX’s Outlook 2026, Edition 37, projects a 900,000-tonne global deficit for the October–September 2026/27 crop year. Its regional assumptions include EU-27 white-sugar output of 13.3 million tonnes and Thai sugar production of 9.6 million tonnes, down 20% from the preceding season.

For India, StoneX estimates 29.0 million tonnes before 1.0 million tonnes of diversion to ethanol, leaving 28.0 million tonnes of white sugar against consumption of 28.5 million. This is a separate forecast framework from the FAS figure. Its explicit ethanol assumption matters: changes to diversion would alter the amount available for the domestic sugar market.

The trade outlook is more uneven than the annual deficit alone suggests. StoneX anticipates a trade-flow surplus in the fourth quarter of 2026, followed by tighter availability in the first half of 2027. It estimates that combined EU and Thai net white-sugar exports will fall by 3.0 million tonnes across 2026/27 and projects a 340,000-tonne white-sugar trade-flow deficit in the first half of 2027. That trade deficit measures a different balance and period from the annual global production deficit.

Brazil provides the potential later counterweight. StoneX forecasts Centre-South sugar production of 38.0 million tonnes in 2026/27, down 2.2 million year on year, with 32 million tonnes of cane left for the following cycle. For 2027/28, it projects crushing of 662 million tonnes, against 635 million in the current campaign, and sugar output of 42.4 million tonnes.

These Centre-South estimates cover a smaller geography than FAS’s national Brazilian figures. Taken on their own terms, they describe a market exposed to an early-2027 supply squeeze but also to a substantial subsequent recovery. The larger crop remains conditional on harvesting performance and mills’ production choices.

Südzucker adds evidence of European crop deterioration

Südzucker’s results release on Thursday confirmed that heat and severe drought since June had sharply reduced beet-yield expectations, particularly in southern Germany and France. Smaller planted area and disease and pest pressure add to the reduction. The company expects significantly lower sugar production from the 2026 campaign.

Reuters separately reported that management expects smaller harvests to support a recovery in European sugar prices from recent four-year lows. That is the company’s price outlook; the crop deterioration is the more tangible supply development.

The commercial backdrop remains difficult. Sugar-segment revenue fell to €1.269 billion from €1.389 billion in the first half, reflecting lower prices and sales volumes. Prospective scarcity and weak realised selling prices can coexist when contracts and inventories adjust at different speeds.

Brazil faces renewed rain as El Niño strengthens

INMET’s forecast issued on 8 October extends unsettled conditions through Friday and Saturday in São Paulo and southern Minas Gerais. Mato Grosso do Sul also faces showers and thunderstorms, with greater storm danger in its south and southwest on Saturday. This reduces confidence in a sustained recovery in harvesting access across those areas. Local rainfall and soil conditions will determine the actual interruption to cane deliveries.

The broader seasonal risk also persists. In its Thursday advisory, the US Climate Prediction Center placed the probability of strong-to-very-strong El Niño conditions through January–March 2027 above 83%. This supports continued attention to weather-sensitive production assumptions, while regional forecasts remain necessary to assess individual cane belts.

Australian supply offers a counterweight

An earlier FAS Canberra report, dated 6 October, provides a more constructive supply outlook. It forecasts Australian sugar production rising 4.4% to 4.0 million tonnes despite a smaller cane crop of 27.9 million tonnes, as higher sugar content improves output. Raw-sugar exports are projected at 3.5 million tonnes, up from 2.62 million, supported by production and carry-in stocks.

The forecast illustrates why cane tonnage alone is insufficient to judge sugar availability. Better extraction and stocks could increase export supply even where dry weather has reduced agricultural volume.

Marine ethanol remains a longer-term demand opportunity

Research from the Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping, reported by Reuters on Thursday, identifies potential for ethanol use in methanol-capable vessels after fuel-system recalibration. Optimization, validation and certification remain necessary.

For sugar, the relevance is a possible additional outlet for ethanol that could eventually influence mills’ production choices. The research does not establish new demand volumes or a current diversion of cane from sugar, so its immediate effect on the supply balance remains unquantified.

What to watch on Friday

March raw sugar is back near the 20-cent threshold, with Thursday’s 20.09-cent low and 21.03-cent high providing immediate price references. December whites have corresponding boundaries at $539.10 and $563.10/t. Thursday’s eventual open-interest figures will help interpret the decline, while calendar spreads will show whether nearby delivery continues to lose relative value.

USDA’s WASDE is scheduled for Friday, 9 October, at 12:00 New York time, or 19:00 in Sofia. Its sugar coverage concerns the United States and Mexico. For the wider market, the key physical tests remain Brazilian crushing progress, Indian recovery rates and the timing of export availability.