Raw sugar jumps 25% to more than $450 a ton as global deficit returns
Key Facts
Coface said in a report released on November 11 that the benchmark price for raw sugar has risen about 25% since the start of 2026, topping $450 a ton in mid-October, its highest level in nearly two years. The increase comes as the market balance shifts, according to the International Sugar Organization’s forecasts, from a surplus in the previous season to a global deficit of 0.2 million tons in the 2026/27 marketing season, which runs from October to September. The market recorded a surplus of 1.1 million tons in the previous season. Coface links the pressure to supply conditions, noting that demand is stable and supply has become a key driver of price movements. It said factors include weather associated with El Niño, higher ethanol production and export restrictions. The company warned that the deficit could be larger than the organization’s estimate.
The effects of the weather are visible in India, where the monsoon season from June to September 2026 ended with rainfall 12.6% below the national average, according to Coface. The lack of rain hurt crop growth and yield prospects as the market heads into a season in which the International Sugar Organization expects a deficit. Coface says El Niño’s impact could continue to weigh on production at least through the first quarter of 2027. This extended timeframe adds uncertainty about supplies in the coming months. Weather matters most in producing countries, where a smaller crop can reduce the volumes available for trade. According to the company, supply, rather than a change in demand, is currently the main driver of price movements.
The diversion of sugar cane to biofuel adds to competition for the raw material, amid ethanol-blending policies in Brazil and India. Brazil raised the mandatory blending rate in fuel from 30% to 32% in July, through January 2027, according to Coface. India, meanwhile, reached its 20% ethanol-blending target in 2025, ahead of the 2030 deadline. The company said the biofuel boom, driven by higher oil prices, adds upward pressure to the sugar market. In countries where cane can be directed to either sugar or ethanol production, these policies affect the volumes available for each use. This competition combines the impact of domestic policy with changes in global supply reflected in the forecast deficit for the next season.
India’s measures are limiting the volumes available for international trade: the country banned sugar exports almost entirely in May 2026, according to Coface. At the same time, it allowed a tariff-rate import quota of one million tons of raw sugar through October 31. Authorities then banned the use of sugar cane for ethanol production from November 1, a measure affecting how the crop is allocated between sugar and fuel. Coface describes export restrictions as one of the factors weighing on the market, alongside weather and biofuels. With Indian exports falling, the market relies heavily on Brazil, which accounts for 55% of global sugar exports, according to the company’s estimate. This concentration makes Brazilian production an important factor in the volume of supplies reaching global markets.
Indian government data reflect the rise in prices earlier in the year: the Ministry of Consumer Affairs and Food said the international price of sugar climbed from $474 a ton on June 30 to $552 on August 20, 2026, an increase of more than 16% in less than two months. The Indian government estimated the global deficit in the 2026/27 season at about 3.3 million tons, attributing higher prices to a combination of weaker domestic production, weather, tight global supplies and other factors. That estimate differs from the International Sugar Organization’s forecast of 0.2 million tons for the same season. India also imposed a 400-ton stock limit on sugar traders from August 1 to November 30, 2026, saying the measure aimed to curb hoarding and rising prices. These estimates and measures show the extent of official concern about a tightening market, while Coface’s report focuses on supply factors weighing on prices.
With Coface expecting El Niño’s impact on production to persist at least through the first quarter of 2027, weather, the allocation of cane between sugar and ethanol, and export decisions will remain among the factors affecting supply. The company links market pressure to the concentration of sugar exports in Brazil, which represents 55% of global trade by its estimate, and to lower Indian exports. At the same time, the International Sugar Organization’s estimate points to a projected deficit after the previous season’s surplus, although the Indian government puts the deficit at about 3.3 million tons. These figures show that estimates of the size of the shortfall differ among organizations, while Coface and the Indian government both cite weather and tight supplies among the factors behind higher prices. The timeframe set by the company for monitoring the weather’s impact runs through the first quarter of 2027. The effects of policy and production on available volumes will depend on decisions by producing countries and how the crop develops.