On Tuesday, NY sugar fell to a 1.75-month low amid a plunge in crude oil prices. WTI crude oil (CLN26) has tumbled more than 15% in the week through Tuesday to a 3.5-month low, which undercuts ethanol prices and may prompt the world’s sugar mills to divert more cane crushing toward sugar production rather than ethanol, thus boosting sugar supplies.
Concerns that dry weather from an El Niño event could disrupt global sugar production are bullish for prices. Last Wednesday, 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.
As a bullish factor, sugar trader Czarnikow last Thursday 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 surge in crude oil prices.
