Sugar prices rise to 15-month high on forecasts of a decline in global production, but in Ukraine, high export logistics costs are putting pressure on prices

More and more experts are inclined to believe that after several seasons of sugar surplus on the world market (1-5 million tons), in the 2026/27 MY there will be a deficit of 0.3-3.3 million tons due to the negative impact of the El Niño phenomenon on sugarcane production in India, Thailand and Brazil, as well as due to a reduction in sugar production against the backdrop of low prices.

Trading company Czarnikow has downgraded its estimate of the world sugar balance for 2026/27 MY from a surplus of 1.4 million tons to a deficit of 100 thousand tons. Experts from the StoneX agency have increased the forecast of the world deficit to 1.7 million tons (compared to 0.55 million tons in May), and experts from the Green Pool Commodity Specialists company have increased it to 3.3 million tons (compared to 1.76 million tons in June). Analysts from Covrig Analytics predict a world sugar deficit of 300 thousand tons.

The reason for the reduction in sugar production will be dry conditions due to El Niño and increased volumes of sugarcane processing into ethanol amid rising oil prices.

October futures for white sugar No. 5 on the London Stock Exchange rose 15% in a month to a 15-month high of $539.5/t (+33% since the start of the Iran war, +13.5% year-on-year), and for cane sugar No. 11 in New York – by 18% to a 16-month high of $385/t (+24%, +5%).

Sugar prices rose 3.1-3.5% yesterday after Bloomberg reported that India plans to cut import duties on sugar to boost supplies and reduce prices during the festive season. It is also a sign of a worsening market situation, as India last imported significant amounts of sugar in the 2017/18 marketing year.

According to S&P Global Energy, sugar production in the EU and the UK will fall to an 11-year low of 14.98 million tonnes this year due to heat and drought.

Ukrsugar experts previously estimated sugar production in Ukraine in the 2026/27 MY at 1.2 million tons, but may reduce their forecast by 100-200 thousand tons due to the deterioration of the sugar beet condition due to drought. At the same time, sugar exports in the current season (as of August 7) reached 622 thousand tons (compared to 580 thousand tons for the entire previous season), and the main buyers were the EU, Uzbekistan, Lebanon and Syria.

Against the backdrop of rising world prices and increased exports, sugar prices in Ukraine have risen to UAH 24,000-25,000/t, but further growth is limited by the lack of sea exports and the increase in the cost of export logistics.