India is considering scrapping the 100% tax on sugar imports to allow in up to 500,000 tonnes in the fourth quarter, its first sizeable import since 2017/18. The proposal is a response to record domestic prices and a monsoon that has fallen well short of expectations: forecaster Skymet has cut its rainfall estimate to 85% of the long-period average, putting the odds of drought at 70%.
The weakness extends beyond this season. The current monsoon shortfall will keep weighing on Indian cane supply into 2027/28, which is why some early estimates for that season are already pointing to a global shortfall. That shifts the market’s framing: a sugar cycle that has been dominated by surplus and weak prices into the end of this year is starting to reprice around the prospect of tighter supply from India, Thailand and Europe further out.
Futures have responded. The global market read strength into the prospect of Indian demand even at relatively modest volumes, and once that risk is priced in, attention is likely to turn to Brazil’s ongoing crush, where output could also come in below plan if firmer ethanol prices pull more cane toward fuel rather than sugar. Fund positioning has moved with the market: net long exposure in New York’s benchmark raw sugar contract has doubled since early June to its largest since the fourth quarter of 2024, when prices were near 22 cents a pound.
Europe’s own supply picture is adding to the tighter tone. The EU crop monitor JRC Mars has cut its beet yield forecast for the season, with French yields hit hardest by successive summer heatwaves and Germany also revised lower. Vesper’s own EU sugar supply estimate has been trimmed to reflect the dry conditions. Refining margins are widening too: the premium for white sugar over raw has climbed to its steepest level since 2024, a sign that the market is pricing tighter white sugar availability on top of the raw sugar tightness.
For now, none of this points to an immediate shortage. Europe’s stocks remain ample and Brazil’s crop is still large by historical standards. But the direction of travel, a weak Indian monsoon, a strained EU beet crop and a Brazilian crush facing its own competing pull from ethanol, is consistent, and it’s why the market is starting to trade the next season’s tightness well before the numbers are confirmed.
