Sugar Prices Dip Amid Favorable Monsoon Conditions in India

October NY world sugar #11 (SBV26) today is down -0.04 (-0.27%), and October London ICE white sugar #5 (SWV26) is down -5.00 (-1.08%).

Sugar prices are lower on today’s stronger dollar and on the prospect for improved India sugar output as its monsoon rains continue to improve. India’s Meteorological Department reported on Wednesday that India’s cumulative monsoon rainfall was 19% below normal as of July 22, a substantial improvement from 42% below normal on June 30.

Sugar prices are supported by a more than 6% increase in WTI crude oil (CLQ26). Higher oil prices are bullish for ethanol, potentially prompting sugar mills globally to allocate more cane crushing to ethanol production rather than sugar, thereby limiting sugar supplies.

A heavily accumulated long position among funds in London ICE sugar could intensify any decline in prices. Recent weekly Commitment of Traders data indicated that funds increased their long positions in ICE London white sugar by 716 during the week ending July 14, reaching a record 58,847 net-long positions (data from 2011).

Sugar prices have surged over the past month, with NY sugar hitting a 2.25‑month high on July 8 and London sugar reaching a 10.5‑month peak on July 7. Prices have risen amid worries that insufficient monsoon rains in India may reduce sugar yields and shrink the nation’s sugarcane harvest, the world’s second‑largest. The Indian Earth Science Ministry has warned that this year’s monsoon could be the weakest in 11 years, as the monsoon season typically spans June through September.

Concerns that dry conditions associated with an El Niño event could disrupt global sugar production are also bullish for prices. Forecasts suggest that El Niño may reduce rainfall in Brazil, India, and Thailand, the world’s three largest sugar‑producing regions. On July 8, the U.S. Climate Prediction Center indicated that the current El Niño is likely to rank among the strongest observed in over 75 years. Additionally, India’s weather agency has recently revised its estimate for cumulative June‑September monsoon rainfall to 90 % of the long‑term average, down from a previous forecast of 92 % issued in April.

A bullish factor cited by Unica on June 22 indicates that Brazil’s Center‑South sugar production for the 2026/27 season through May amounted to 6.838 MMT, a 2.0 % year‑over‑year decline as mills increased ethanol production. The share of sugarcane devoted to sugar fell to 41.42 % from 50.09 % as ethanol crushing rose to 58.38 % from 49.91 % in the previous year. Additionally, sugar trader Czarnikow revised its global 2026/27 sugar balance estimate on June 11, reducing the projected surplus from 1.4 MMT to a deficit of 100,000 MT, reflecting the shift toward ethanol amid rising crude oil prices.

On April 28, Conab released its initial forecast for the new sugar season, projecting a 0.5 % year‑over‑year decline in Brazilian sugar output to 43.952 MMT, while ethanol production is expected to increase by 7.2 % year‑over‑year to 29.259 million liters.

On April 7, the Indian Sugar and Bio‑energy Manufacturers Association (ISMA) adjusted its forecast for 2025/26 Indian sugar production to 32 MMT, down from an earlier estimate of 32.4 MMT. ISMA also projects exports of 800,000 MT for the same period. India introduced a sugar‑export quota system in 2022/23 following delayed rains that reduced output and constrained domestic supplies. Concurrently, the USDA indicated on April 30 that it anticipates a 2.5 MMT sugar surplus in India for 2026/27, marking the first surplus in two years.

On May 18, the International Sugar Organization (ISO) projected a record global sugar crop for the 2025/26 season and upwardly revised its surplus estimate. ISO anticipates global sugar production of 182 MMT, representing a 3.5 % year‑over‑year increase, and raises its surplus forecast to 2.2 MMT from a February estimate of 1.22 MMT, rebounding from a 3.46 MMT deficit recorded in 2024‑25.

For 2026/27, however, ISO projects a 1.15 % year‑over‑year decline in global sugar production to 180 MMT, resulting in a global deficit of 262,000 MT, owing to potential El Niño‑related impacts on harvests in India and Thailand. StoneX, on May 20, forecast a deficit of 550,000 MT, while Covrig Analytics trimmed its surplus forecast to 100,000 MT, down from a May estimate of 380,000 MT.

The USDA, in its May‑released biannual report, projects a 6.5 % year‑over‑year decline in global 2026/27 sugar production to 184.854 MMT, down from the record 186.056 MMT recorded in 2025/26. Global human sugar consumption for 2026/27 is expected to rise 0.4 % year‑over‑year to a record 179.991 MMT. The USDA also forecasts that global ending stocks will increase 2.0 % year‑over‑year to 44.410 MMT. The USDA’s Foreign Agricultural Service (FAS) predicts that Brazil’s 2026/27 sugar output will fall 3.0 % year‑over‑year to 42.5 MMT, while India’s production is expected to grow 12 % year‑over‑year to 33.6 MMT, driven by favorable monsoon conditions and expanded sugar acreage. In contrast, Thailand’s 2026/76 sugar production is forecast to decline 15.6 % year‑over‑year to 9.5 MMT.

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