Sugar prices extend four-day rally as weak India monsoon fuels supply concerns
Global sugar prices climbed for a fourth consecutive session as weak Indian monsoon rains and Brazil’s increasing ethanol production fueled supply concerns. Strengthening El Niño risks, lower production forecasts and tightening 2026/27 global balances are reinforcing bullish sentiment, with weather developments expected to remain the key driver of market direction.
Global sugar prices rose for a fourth straight session on Tuesday, with New York sugar touching a six-week high, as worries over weak monsoon rains in India raised concerns about lower sugarcane production in the world’s second-largest sugar producer.
According to India’s Meteorological Department, cumulative monsoon rainfall was 42% below normal as of June 29. The Ministry of Earth Sciences has also warned that this year’s June-September monsoon could be the weakest in 11 years, raising fears of lower sugar yields and tighter supplies, barchart reported.
Further support for prices came from Brazil, where sugar production has slowed as mills shift more sugarcane toward ethanol production. Industry group Unica reported that sugar output in Brazil’s Centre-South region reached 6.838 million tonnes through May in the 2026/27 season, down 2% from a year earlier. The share of sugarcane used for sugar production fell to 41.42% from 50.09% last year, while the share used for ethanol increased to 58.38%.
Reflecting the shift, sugar trader Czarnikow lowered its global 2026/27 sugar balance estimate on June 11 from a surplus of 1.4 million tonnes to a deficit of 100,000 tonnes, citing increased ethanol production in Brazil following higher crude oil prices.
Sugar prices had fallen to a two-month low last week after the reopening of the Strait of Hormuz eased concerns over global supply disruptions. The reopening is expected to reduce shipping costs, insurance expenses and fuel prices, lowering import costs for sugar buyers. A stronger US dollar had also weighed on sugar prices.
Weather concerns continue to support the market after Japan’s Meteorological Agency confirmed the formation of an El Niño weather pattern across the equatorial Pacific on June 17. El Niño is expected to reduce rainfall in Brazil, India and Thailand, the world’s three largest sugar-producing regions.
India’s weather office has already lowered its rainfall forecast for the June-September monsoon season to 90% of the long-term average from its earlier estimate of 92%. Meanwhile, the US National Oceanic and Atmospheric Administration estimates a 67% chance of a “Super El Niño” developing this year.
Brazil’s supply outlook also remains mixed. State agency Conab has forecast the country’s 2026/27 sugar production at 43.95 million tonnes, down 0.5% from a year ago, while ethanol output is expected to rise 7.2%. The US Department of Agriculture (USDA) has projected Brazil’s sugar production at 42.5 million tonnes, down 3%, as mills divert more cane to ethanol.
In India, the Indian Sugar and Bio-energy Manufacturers Association (ISMA) revised its 2025/26 sugar production estimate to 32 million tonnes from 32.4 million tonnes. The industry body also expects sugar exports of 800,000 tonnes. India introduced sugar export quotas in the 2022/23 season after lower production tightened domestic supplies. However, the USDA expects India to return to a sugar surplus of 2.5 million tonnes in 2026/27, the first surplus in two years.
The International Sugar Organization (ISO) has projected a record global sugar production of 182 million tonnes in the 2025/26 season and raised its surplus estimate to 2.2 million tonnes from 1.22 million tonnes. The increase would mark a recovery from the 3.46 million-tonne deficit recorded in 2024/25.
For the 2026/27 season, however, the ISO expects global sugar production to decline by 1.15% to 180 million tonnes, resulting in a deficit of 262,000 tonnes due to the expected impact of El Niño on crops in India and Thailand. StoneX has forecast a larger deficit of 550,000 tonnes, while Covrig Analytics has reduced its projected surplus to 100,000 tonnes from 380,000 tonnes estimated earlier.
The USDA has forecast global sugar production for 2025/26 at a record 189.32 million tonnes, up 4.6% from the previous year, while global consumption is expected to reach a record 177.92 million tonnes. Global ending stocks are projected to decline by 2.9% to 41.19 million tonnes. The USDA also expects Brazil’s sugar production to rise to a record 44.7 million tonnes in 2025/26, India’s output to increase 25% to 35.25 million tonnes, and Thailand’s production to grow 2% to 10.25 million tonnes.
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Source : Chinimandi
