The raw sugar market has turned bullish amid a shift in the supply-demand outlook. ICE New York October futures, which traded broadly between 14 and 16 cents from April through July, rose from 14.66 cents at the end of July to 17.81 cents at the end of August, and closed at 18.73 cents on September 10. The main driver of the rally was the Sao Paulo Sugar Industry Association's announcement on August 6 that June production in Brazil's main south-central producing region came to 3.9 million tons, down 26.3 percent from a year earlier. At the same time, the advancing El Nino phenomenon raised the prospect of insufficient rainfall in India, prompting speculative funds to buy back short positions. On August 20, India's Directorate General of Foreign Trade announced a duty-free allowance for imports of up to 1 million tons of raw sugar through October 31, and the view that India would become an importer was seen as a turning point for the global supply-demand balance. The European Commission also forecast in August that raw sugar production for the 2026-27 season would total 13.4 million tons, down 19 percent from the previous year. Speculative positioning flipped from a net short of 112,413 lots on July 28 to a net long of 243,463 lots as of September 1, with roughly 350,000 lots bought over a little more than a month.
Brazil's south-central June output fell 26.3% y/y and India's duty-free import allowance tightened global raw sugar supply, driving ICE Sugar No.11 futures sharply higher.
