October NY world sugar #11 (SBV26) on Wednesday closed up +0.17 (+1.15%), and Aug London ICE white sugar #5 (SWQ26) closed up +8.30 (+1.75%).
Sugar prices extended their week-long rally on Wednesday, with NY sugar posting a 7-week high and London sugar posting a 9.75-month nearest-futures high. Sugar prices are climbing 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 on Wednesday that India’s cumulative monsoon rainfall was 38% below normal as of July 1. 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 last Monday reported 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. On June 17, Japan’s Meteorological Agency confirmed an El Niño weather pattern had formed across the equatorial Pacific. The emergence of an El Niño is likely to curb rainfall in Brazil, India, and Thailand, the world’s three largest sugar-producing regions. 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. The US National Oceanic and Atmospheric Administration (NOAA) estimates a 67% probability of a “Super El Niño” this year, the strongest ever recorded.
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.
