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October NY world sugar #11 (SBV26) on Thursday closed up +0.01 (+0.07%), and Aug London ICE white sugar #5 (SWQ26) closed down -2.00 (-0.42%).
Sugar prices settled mixed on Thursday. Strength in the Brazilian real (^USDBRL) is positive for sugar prices, as the real rallied to a 3-week high against the dollar on Thursday, discouraging export sales from Brazil’s sugar producers.
An improvement in India’s monsoon rains is limiting gains in sugar prices after India’s Meteorological Department reported on Wednesday that India’s cumulative monsoon rainfall was 15% below normal as of July 8, a substantial improvement from 42% below normal on June 30.
Sugar prices have rallied sharply over the past two weeks, with NY sugar posting a 1.75-month high on Wednesday and London sugar posting a 10-month high on Tuesday. Sugar prices have climbed amid concerns that weak monsoon rains in India will lower sugar yields and reduce the country’s sugarcane harvest, the world’s second largest. India’s Meteorological Department reported today that India’s cumulative monsoon rainfall was 15% below normal as of July 8. India’s Earth Science Ministry warns that this year’s monsoon in India could be the weakest in 11 years. India’s monsoon season runs from June through September.
As a bullish factor, Unica reported on June 22 that 2026/27 Brazil Center-South sugar production through May is 6.838 MMT, down -2.0% y/y as millers ramped up ethanol production. The percent of sugarcane used for sugar by Brazil’s sugar mills dropped to 41.42% from 50.09% as cane crushing for ethanol production rose to 58.38% from 49.91% last year. Also, sugar trader Czarnikow on June 11 cut its global 2026/27 sugar balance estimate from a surplus of 1.4 MMT to a deficit of -100,000 MT, as Brazil’s sugar mills produce more ethanol than sugar amid the recent surge in crude oil prices.
Concerns that dry weather from an El Niño event could disrupt global sugar production are also bullish for prices. The emergence of an El Niño is likely to curb rainfall in Brazil, India, and Thailand, the world’s three largest sugar-producing regions. On Wednesday, the US Climate Prediction Center said the El Niño weather pattern that emerged across the equatorial Pacific last month will likely be one of the strongest in more than 75 years. India’s weather office recently lowered its cumulative rainfall estimate for the June-September monsoon season last Friday to 90% of the long-term average, down from a forecast of 92% issued in April.
On April 28, Conab, in its initial report for the new sugar season, forecast that 2026/27 Brazilian sugar output will decline by -0.5% to 43.952 MMT, while ethanol output will climb by +7.2% y/y to 29.259 million liters. On April 21, the USDA forecast Brazil’s 2026/27 sugar production at 42.5 MMT, down -3% y/y, citing millers crushing more cane for ethanol than for sugar.
On April 7, the Indian Sugar and Bio-energy Manufacturers Association (ISMA) revised its 2025/26 India sugar production forecast to 32 MMT, down from an earlier projection of 32.4 MMT. The ISMA also projects India’s 2025/26 sugar exports of 800,000 MT. India introduced a quota system for sugar exports in 2022/23 after late rain reduced production and limited domestic supplies. Meanwhile, the USDA on April 30 said it expects a 2026/27 sugar surplus in India of 2.5 MMT, the first surplus in two years.
On May 18, the International Sugar Organization (ISO) forecasted a record global sugar crop for the 2025/26 season and raised its global surplus estimate. ISO forecasts 2025/26 global sugar production at a record 182 MMT, up +3.5% y/y, and raised its 2025/26 global sugar surplus estimate to 2.2 MMT from a February forecast of 1.22 MMT, rebounding from a -3.46 MMT deficit in 2024-25.
For 2026/27, however, ISO forecasts that global sugar production will fall by -1.15% y/y to 180 MMT, and that there will be a global sugar deficit of -262,000 MT, citing the potential impact of an El Niño weather pattern on harvests in India and Thailand. For 2026/27, StoneX on May 20 forecast a deficit of -550,000 MT, while Covrig Analytics cut its surplus forecast to 100,000 MT from a May estimate of 380,000 MT.
The USDA, in its bi-annual report released on December 16, projected that global 2025/26 sugar production would climb +4.6% y/y to a record 189.318 MMT and that global 2025/26 human sugar consumption would increase +1.4% y/y to a record 177.921 MMT. The USDA also forecast that 2025/26 global sugar ending stocks would fall by -2.9% y/y to 41.188 MMT. The USDA’s Foreign Agricultural Service (FAS) predicted that Brazil’s 2025/26 sugar production would rise by 2.3% y/y to a record 44.7 MMT. FAS predicted that India’s 2025/26 sugar production would increase by 25% y/y to 35.25 MMT, driven by favorable monsoon rains and increased sugar acreage. FAS predicted that Thailand’s 2025/26 sugar production will increase by +2% y/y to 10.25 MMT.
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