October NY world sugar #11 (SBV26) rose by +0.32 (+2.15%) today, while Aug London ICE white sugar #5 (SWQ26) increased by +0.20 (+0.04%).
Sugar prices are trending higher today, supported by a rally in the Brazilian real (^USDBRL) to a two-week high. The strengthening currency makes Brazilian sugar exports less competitive, discouraging sales from local producers.
Sugar markets have experienced a significant rally over the last fortnight; NY sugar reached a 1.75-month high last Wednesday, and London sugar hit a 9.75-month peak last Thursday. This upward movement is fueled by concerns that inadequate monsoon rains in India could diminish sugarcane yields in the world’s second-largest producing nation. According to the Indian Meteorological Department, cumulative monsoon rainfall was 20% below seasonal norms as of July 6. Furthermore, India’s Earth Science Ministry has cautioned that this year’s monsoon could be the weakest in 11 years. The monsoon season typically spans from June through September.
Adding to the bullish sentiment, Unica reported on June 22 that Brazil’s Center-South sugar production through May reached 6.838 MMT for the 2026/27 season, a 2.0% year-over-year decrease as mills prioritize ethanol production. The proportion of sugarcane allocated to sugar production fell to 41.42% from 50.09% last year, while cane crushing for ethanol rose to 58.38% from 49.91%. Additionally, sugar trader Czarnikow revised its global 2026/27 sugar balance estimate on June 11, shifting from a 1.4 MMT surplus to a deficit of 100,000 MT, noting that Brazilian mills are favoring ethanol amid rising crude oil prices.
The potential for El Niño-induced dry weather to disrupt global production is also providing price support. On June 17, Japan’s Meteorological Agency confirmed the formation of an El Niño pattern in the equatorial Pacific. This phenomenon is expected to reduce rainfall in the primary sugar-producing regions of Brazil, India, and Thailand. India’s weather office recently lowered its June-September monsoon rainfall forecast to 90% of the long-term average. Meanwhile, the US National Oceanic and Atmospheric Administration (NOAA) estimates a 67% probability of a “Super El Niño” this year, which could be the most intense on record.
In its initial report for the new season on April 28, Conab projected that 2026/27 Brazilian sugar output would decline by 0.5% to 43.952 MMT, while ethanol production is expected to rise by 7.2% year-over-year to 29.259 million liters. Earlier, on April 21, the USDA forecast Brazil’s 2026/27 sugar production at 42.5 MMT, a 3% annual decline, citing a shift toward ethanol crushing.
On April 7, the Indian Sugar and Bio-energy Manufacturers Association (ISMA) adjusted its 2025/26 India sugar production forecast to 32 MMT, down from a previous 32.4 MMT, while projecting exports of 800,000 MT. India maintains an export quota system implemented in 2022/23 to manage domestic supply following rainfall shortages. Conversely, the USDA reported on April 30 that it anticipates a 2.5 MMT sugar surplus in India for 2026/27, marking the first surplus in two years.
The International Sugar Organization (ISO) previously forecasted a record global crop for the 2025/26 season on May 18, raising its global surplus estimate to 2.2 MMT from an earlier forecast of 1.22 MMT. This follows a 3.46 MMT deficit in 2024-25.
However, for the 2026/27 period, the ISO anticipates global production will fall by 1.15% to 180 MMT, resulting in a global deficit of 262,000 MT due to El Niño risks in India and Thailand. Other analysts share this cautious outlook; StoneX forecasted a 550,000 MT deficit on May 20, while Covrig Analytics lowered its surplus projection to 100,000 MT from a previous 380,000 MT estimate.
In its bi-annual report released on December 16, the USDA projected that global 2025/26 sugar production would rise by 4.6% to a record 189.318 MMT, while global human consumption would increase by 1.4% to 177.921 MMT. The USDA also expected 2025/26 global ending stocks to decrease by 2.9% to 41.188 MMT. The USDA’s Foreign Agricultural Service (FAS) predicted Brazil’s 2025/26 sugar production would grow by 2.3% to 44.7 MMT, while India’s production could surge 25% to 35.25 MMT due to favorable monsoons, and Thailand’s output would rise 2% to 10.25 MMT.
