The Asian race for sugar: what China, India, and Thailand’s strategy reveals about the 2026/27 market

In recent years, the global sugar market has had to contend with a new pattern of volatility. While attention was once concentrated on Brazilian crops or India’s export policies, the 2026/27 cycle brings a new element into focus: the dynamics of the Asian market.

The combination of lower export availability from India, uncertainty over Thailand’s next crop, and the behavior of Chinese imports could reshape the commodity’s trade flows over the coming months. For refiners, food companies, traders, and risk managers, understanding this new configuration will be just as important as monitoring the traditional supply-and-demand fundamentals.

More than debating whether prices will rise or fall, the market is beginning to answer another question: who will be responsible for supplying Asia if its main regional suppliers reduce their sugar availability?

According to Vipul Bhandari, Head of Desk EMEA at Hedgepoint Global Markets, the market is entering a phase in which physical availability will be just as important as production volumes. “Participants should not focus only on the size of crops, but on which countries will be able to export sugar consistently. In a tighter supply environment, the origin of the product becomes just as relevant as the volume available”.

A new geography for Asian sugar

Historically, Thailand has established itself as Asia’s leading sugar exporter. Its strategic location, competitive logistics costs, and proximity to key consumers have made the country a benchmark supplier for markets such as Indonesia, the Philippines, South Korea, Japan, and, at certain points, China itself. The current dry spell, ONWR enacting the water crisis management, might impact the availability in a significant manner.

In recent years, however, this balance has begun to shift.

India, Asia's second largest exporter, has started to prioritize domestic supply amid lower production. The combination of price-control policies, growth in internal consumption, and the allocation of part of the sugarcane crop to ethanol production has significantly reduced its exportable supply. Impact of El Nino should have major impact on the 2027/2028 crop season.

The high white premium is suggesting no availability of LQW's from the country. Market is trying to price it in already, with higher white premiums, ensuring the refiners fill in the gap.

This shift changes regional dynamics because India had been playing an important role as a complementary supplier for several Asian buyers, Especially the low-quality whites. The smaller its presence in the international market, the more demand is likely to concentrate on other exporters. Moreover, with the surge in the domestic prices, and significantly lower ending stocks, talks of India importing sugar has been heard.

At the same time, Thailand enters the 2026/27 crop year surrounded by climate uncertainty. Although the final outlook will depend on crop development in the months ahead, different projections point to risks to production potential if weather conditions do not evolve favorably.

In this context, China remains the main demand factor capable of quickly changing the market balance. China should keep providing support to prices, in case of pull back on the international markets, but not chasing the price.

Unlike other major consumers, the country alternates between periods of greater self-sufficiency and moments of strong presence in the international market. Small changes in its import policy or inventory levels often have significant effects on global trade flows, especially when export availability is more restricted.

From the perspective of Asian buyers, supply predictability has become just as important as price. In markets highly dependent on imports, delivery security has begun to influence medium-term purchasing decisions.

The domino effect on trade flows

When major exporters reduce their supply, the impacts go far beyond the volume available for trading.

A smaller role for India and potential limitations in Thailand tend to increase Asia’s dependence on sugar produced in other regions, especially Brazil, the world’s largest exporter of the commodity.

This shift could lead to important changes in global logistics. Markets traditionally supplied by Asian exporters may begin competing for Brazilian volumes, increasing competition for cargoes and changing price differentials across regions.

In addition, trade routes are becoming longer, which can raise freight costs and extend the time needed to replenish inventories. For industrial buyers, this means a greater need for planning, both in physical management and in financial hedging for purchases.

At the same time, Southeast Asian countries may seek to diversify their purchasing origins, reducing dependence on a limited number of suppliers. While this strategy increases supply security, it also tends to heighten competition for available volumes in the international market.

For Bhandari, this shift could further strengthen Brazil’s role in supplying Asia. “Whenever exportable supply in Asia declines, buyers need to look for new origins. Brazil naturally gains ground because of its production scale, competitiveness, and logistical capacity to serve different markets.”

For Brazil, this movement represents an opportunity to expand its share in Asian markets, especially in an environment of reduced regional competition.

Weather returns to the center of attention

As if structural challenges were not enough, the market is also monitoring the possibility of a new El Niño event forming during the 2026/27 cycle.

Although it is still too early to determine its intensity and definitive impacts, events of this nature often influence rainfall and temperature patterns in key producing regions.

In India and Thailand, changes in monsoon patterns can affect sugarcane development and reduce agricultural yields. In Brazil, the effects vary by producing region and may influence both crop development and the pace of crushing throughout the season.

“Weather remains an important variable, but today the market reacts to the combination of weather events, government policies, and commercial decisions. This overlap of factors makes risk management much more complex than in previous cycles,” says Bhandari.

Beyond the direct impact on production, the mere possibility of a significant weather event often increases the market’s sensitivity to weather updates, raising volatility in futures prices and physical premiums. In tighter global supply scenarios, any revision to production estimates tends to trigger stronger reactions from market participants.

What to watch in the coming months

Against this backdrop, several indicators are expected to draw market participants’ attention throughout the second half of the year:

• India’s export policy: potential revisions to export restrictions and the balance between domestic supply and production directed to ethanol.

• Chinese imports: changes in the pace of purchases or inventory management could quickly alter international demand.

• Thailand’s crop: the evolution of weather conditions will be decisive in measuring Southeast Asia’s supply capacity.

• Brazil’s sugar/ethanol mix: a variable that directly influences the supply available for export. 

• The Middle East and Asian markets are likely to react quickly to any change in India’s export policy, reinforcing the need for constant monitoring of these factors.

Conclusion

The sugar market enters the 2026/27 cycle facing a scenario in which trade geopolitics, weather, and agricultural policy decisions begin to jointly influence the commodity’s global flows.

Rather than monitoring only crop sizes, market participants will need to observe how China, India, Thailand, and Brazil respond to supply-and-demand challenges in a more volatile environment.

“More than predicting prices, the challenge will be to monitor how trade flows reorganize over the course of the season. Those who can anticipate these changes will be better positioned to make buying, selling, and risk management decisions,” concludes Vipul Bhandari.

Risk Management: Preserving Operating Margins Throughout the Market Cycle

Managing performance in the co-product market requires a holistic approach, since the prices of DDGS, corn, and soybean meal, as well as exchange rates, are interrelated. As industrial supply grows and new export routes open up, profit margins fluctuate rapidly, making cross-hedge strategies the best option for ensuring cost predictability for buyers and producers. Track these dynamics through the Hedgepoint HUB and talk to our team to structure the ideal protection for your business planning.

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