News of India’s 1 MMT duty-free raw sugar import allocation boosted the global market last month, and prices are now up nearly 30% over the past month. Then domestic Indian prices retraced, and the imports stopped looking worth the trouble. Uptake is now expected to reach only around half the available volume.
Underneath the policy noise the tone stays supportive. Prices have recently stuck above 18 cents/lb, with El Nino effects still in play, chiefly dry conditions in India and rains in Center-South Brazil, holding expectations for the 2026/27 season at deficit conditions. The October 2026 No.11 raw contract rose to 18.36 USc/lb on 1 September and October No.5 white sugar increased to $534/mt. The Indian crystal sugar price at Kolhapur has come down roughly 25% from the record high it set on 25 August, which is the move that erodes an importer’s margin while world raws stay well supported. India’s Food Ministry has also announced a fortnightly allocation system from September, replacing monthly quotas, to avoid spikes in local prices.
Europe is the bigger supply concern. DG AGRI now forecasts EU 2026/27 output at 13.4 MMT, close to a 20% drop from last season, with ending stocks falling to 2.32 MMT from 3.06 MMT. Vesper’s own EU analysis estimates supply at 13.5 MMT, or 14.3 MMT including the UK, after persistent dry conditions across growing regions stretched into a critical period for yield formation. French growers’ association CGB has warned output could fall more than 20% against the five-year average, with root weight running 18% below average in mid-August and leaf development down more than half. The JRC MARS bulletin of 24 August cut expected French beet yield to 76.5 t/ha, down 15% year-on-year, and put the European average at 72.2 t/ha, also down 11% year-on-year.
Brazil pulls the other way, but slowly. Conab puts 2026/27 cane production at 705.2 MMT, a 4.7% gain on last season, though with more cane going to ethanol: sugar output is forecast 2.9% lower at 42.89 MMT while cane ethanol rises 9.7%. Center-South shipments over the first 15 working days of August came in 57% below the same period last year, lending support to world pricing on perceptions of shorter near-term Brazilian supply even if the full season still delivers.
Funds have taken the point, adding 25,445 contracts in NY11 to reach a net long of 55,509 lots while trimming coffee and adding shorts in cocoa. China’s domestic crop and import appetite are the next thing to watch, and that is where the bears have something to work with.
