October NY world sugar #11 (SBV26) on Monday closed down -0.13 (-0.87%), and Aug London ICE white sugar #5 (SWQ26) closed down -4.00 (-0.86%).
Sugar prices moved lower on Monday for a second session and posted 2-week lows. An improvement in India’s monsoon rains is weighing on sugar prices after India’s Meteorological Department reported today that India’s cumulative monsoon rainfall was 19% below normal as of July 13, a substantial improvement from 42% below normal on June 30.
Sugar prices rebounded from their worst levels on Monday after crude oil prices surged. WTI crude oil (CLQ26) soared by more than +9% on Monday to a 3.5-week high, which benefits ethanol prices and could persuade global sugar mills to divert more cane crushing toward ethanol production rather than sugar, thus curbing sugar supplies.
An excessively long position in London ICE sugar by funds can exacerbate any price downturn. Last Friday’s weekly Commitment of Traders (COT) data showed funds boosted their long positions in ICE London white sugar by +10,368 in the week ended July 7 to a record 58,131 net-long positions (data from 2011).
Sugar prices have rallied sharply over the past three weeks, with NY sugar posting a 2-month nearest-futures high last Wednesday and London sugar posting a 10.25-month high last 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 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. Last 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 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 biannual report released in May, projected that global 2026/27 sugar production would fall by 6.5% y/y to 184.854 MMT from a record 186.056 MMT in 2025/26. Global 2026/27 human sugar consumption is expected to increase +0.4% y/y to a record 179.991 MMT. The USDA also forecast that 2026/27 global sugar ending stocks would increase by 2.0% y/y to 44.410 MMT. The USDA’s Foreign Agricultural Service (FAS) predicted that Brazil’s 2026/27 sugar production would fall by -3.0% y/y to 42.5 MMT. FAS predicted that India’s 2026/27 sugar production would increase by +12% y/y to 33.6 MMT, driven by favorable monsoon rains and increased sugar acreage. FAS predicted that Thailand’s 2026/76 sugar production will fall by -15.6% y/y to 9.5 MMT.
