October NY world sugar #11 (SBV26) fell -0.02 (-0.13%) on Friday, while Aug London ICE white sugar #5 (SWQ26) dropped -11.30 (-2.31%), reversing early gains as overbought technical indicators triggered long liquidation.
Sugar markets have surged over the past two weeks, with NY sugar reaching an 8-week high and London sugar hitting a 10-month peak. Recent gains stem from concerns over reduced Indian sugarcane yields due to deficient monsoon rains, with India’s Meteorological Department reporting 20% below-normal rainfall as of July 6. The Indian Earth Science Ministry warned of the weakest monsoon season in 11 years, with the monsoon period running through September.
Additional upward pressure comes from Brazil’s shifting production priorities. Unica data from June 22 showed a 2.0% y/y decline in 2026/27 Center-South sugar output to 6.838 MMT, as mills prioritize ethanol production. The proportion of sugarcane allocated to sugar dropped to 41.42% from 50.09%, while ethanol-focused crushing increased to 58.38%. Trader Czarnikow revised global 2026/27 sugar balance estimates to a -100,000 MT deficit, citing reduced Brazilian sugar output amid rising crude oil prices.
El Niño weather patterns are further supporting prices. Japan’s Meteorological Agency confirmed the formation of an El Niño in the equatorial Pacific on June 17, which could reduce rainfall in Brazil, India, and Thailand. India recently adjusted its monsoon rainfall forecast to 90% of the long-term average, down from 92%, while NOAA estimates a 67% chance of a record-breaking “Super El Niño.”
Brazilian production forecasts show mixed signals. Conab’s April 28 report projected a 0.5% y/y decline in 2026/27 sugar output to 43.952 MMT, offset by a 7.2% y/y rise in ethanol production. The USDA, meanwhile, forecasts a 3% y/y drop in Brazil’s 2026/27 sugar production to 42.5 MMT. In India, the ISMA revised 2025/26 production to 32 MMT (down from 32.4 MMT) and expects 800,000 MT in exports, building on a quota system introduced after 2022/23 crop shortfalls.
The International Sugar Organization (ISO) forecasts a record 182 MMT of global sugar production in 2025/26, up 3.5% y/y, with a 2.2 MMT surplus. However, 2026/27 projections show a 1.15% y/y decline to 180 MMT and a -262,000 MT deficit, driven by El Niño risks. Analysts like StoneX and Covrig Analytics also anticipate deficits or reduced surpluses for 2026/27.
Earlier USDA data from December 16 projected 2025/26 global production at a record 189.318 MMT, with consumption rising 1.4% y/y to 177.921 MMT. Ending stocks are expected to fall 2.9% y/y to 41.188 MMT. Brazil’s 2025/26 sugar output is forecast to rise 2.3% y/y to 44.7 MMT, while India’s could jump 25% y/y to 35.25 MMT, contingent on favorable monsoons and expanded acreage.
On the date of publication,
Rich Asplund
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