White sugar futures extended a sharp multi-week rally through Tuesday before giving some of it back on Wednesday. October London white sugar closed up 2.70, or 0.83 percent, on Monday, then 5.20, or 1.03 percent, on Tuesday to a 15-month high, before falling 4.40, or 0.86 percent, on Wednesday. New York's raw sugar contract followed the same arc, touching a fresh 1.25-year high intraday on Wednesday before reversing. The rally has been built on mounting evidence that the 2026/27 season will run tighter than earlier expected. The pullback, by contrast, looks technical. Long liquidation after fresh highs, not a change in fundamentals, is the source's own read on Wednesday's move.
A Wave of Forecasters Has Flipped the Global Balance in a Matter of Weeks
The single biggest story of the week is how many analysts have moved from projecting a 2026/27 surplus to projecting a deficit, and how quickly. Green Pool raised its deficit forecast on July 29 to 3.3 million metric tons, up from 1.76 million in June. StoneX did the same the day before, lifting its deficit call to 1.7 million metric tons from 550,000 in May. Czarnikow went furthest of all, moving from a projected 1.4 million ton surplus in an earlier estimate to a 100,000 ton deficit on June 11, citing Brazilian mills diverting cane to ethanol as crude oil prices surged on the US-Iran conflict. Covrig Analytics' current position is genuinely unclear in the source material, with one figure showing a shift to a 300,000 ton deficit and another showing a narrower 100,000 ton surplus, and that inconsistency is flagged here rather than resolved. Even the ISO, at 262,000 tons, and the USDA, projecting production down 6.5 percent year on year to 184.854 million metric tons, are now pointing the same direction. Three months ago the consensus was surplus. It no longer is.
Brazil and Europe Are Both Producing Less Right Now, Not Just on Paper
The forecast shift has real production data behind it. Unica reported Brazil's Center-South June sugar output fell 26.3 percent year on year to 3.903 million metric tons, a sharp decline from the world's largest producer. S&P Global Energy data show EU and UK production heading to 14.98 million metric tons this year, the lowest level in 11 years, driven by drought and heat. FAS is projecting Brazil's full 2026/27 crop down 3 percent to 42.5 million metric tons and Thailand's down 15.6 percent to 9.5 million metric tons. Conab's own initial 2026/27 forecast, released April 28, shows Brazilian sugar output declining a more modest 0.5 percent to 43.952 million metric tons, with ethanol output rising 7.2 percent, evidence that mills are indeed shifting cane away from sugar production toward fuel. These are not abstract balance-sheet revisions. They are harvest numbers already coming in lower.
El Niño and a Weak Monsoon Are the Risk the Market Is Pricing Forward
The US Climate Prediction Center said on July 8 that the emerging El Niño pattern will likely be one of the strongest in more than 75 years, with rainfall expected to suffer across Brazil, India, and Thailand, the world's three largest producers. India's own weather data is doing little to ease that concern. The India Meteorological Department said on July 31 that August-September monsoon rainfall will likely be below normal, and the country's Earth Science Ministry has warned this could be the weakest monsoon in 11 years. The IMD's cumulative rainfall estimate for the June-September season has been trimmed to 90 percent of the long-term average, down from 92 percent in April, though cumulative rainfall as of August 10 stood 12 percent below normal, an improvement from 42 percent below normal on June 30. That improvement matters, because the primary bearish counterweight to all of this is India itself. USDA is still projecting a 2026/27 Indian surplus of 2.5 million metric tons, the first in two years, with FAS forecasting production up 12 percent to 33.6 million metric tons on favorable monsoon rains and expanded acreage. If the monsoon disappoints as much as the Earth Science Ministry fears, that surplus forecast is the one most likely to need revising next.
