Sugar Markets Steady Above Recent Two-Month Low Amid Supply Concerns

July NY world sugar #11 (SBN26) on Thursday closed up +0.13 (+0.97%), and Aug London ICE white sugar #5 (SWQ26) closed down -0.10 (-0.02%).

Sugar prices settled mixed on Thursday as they consolidated above Monday’s 2-month low. The reopening of the Strait of Hormuz eased global supply disruptions, reducing shipping rates, insurance costs, and fuel prices, which lowered importers’ costs. However, recent dollar strength has pressured prices after the dollar index ($DXY) rallied to a 13-month high on Wednesday.

Losses in sugar are limited due to concerns over weak monsoon rains in India, the world’s second-largest producer. India’s Meteorological Department reported cumulative monsoon rainfall was 42% below normal as of June 24, with the Earth Science Ministry warning this year’s monsoon could be the weakest in 11 years. India’s monsoon season runs from June through September.

Brazilian sugar production through May 2026 is down 2.0% year-over-year at 6.838 MMT, according to Unica. The share of sugarcane used for sugar fell to 41.42% from 50.09% as mills shifted toward ethanol production, which rose to 58.38% from 49.91%. Czarnikow revised its 2026/27 global sugar balance to a deficit of 100,000 MT from a prior surplus estimate, citing increased ethanol demand amid rising crude oil prices.

Bullish factors include El Niño concerns, as Japan’s Meteorological Agency confirmed its formation across the equatorial Pacific. El Niño is likely to reduce rainfall in Brazil, India, and Thailand, the top three producers. India’s weather office recently lowered its June-September monsoon forecast to 90% of the long-term average, down from 92% in April. The NOAA estimates a 67% probability of a “Super El Niño” this year.

The USDA’s December 16 report projected a record 2025/26 global sugar production of 189.318 MMT, up 4.6% year-over-year, with ending stocks falling 2.9% to 41.188 MMT. Brazil’s output is forecast at 44.7 MMT (+2.3%), while India’s production is expected to rise 25% to 35.25 MMT. Thailand’s production is projected at 10.25 MMT (+2%).

For 2026/27, the USDA anticipates a 1.15% decline in global production to 180 MMT and a deficit of 262,000 MT, per the International Sugar Organization. StoneX forecasts a larger deficit of 550,000 MT, while Covrig Analytics reduced its surplus forecast to 100,000 MT.

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