Sugar prices moved lower today, July 23, 2026, with October NY world sugar #11 (SBV26) declining by -0.04 (-0.27%) and October London ICE white sugar #5 (SWV26) falling by -5.00 (-1.08%). This downturn is primarily attributed to a stronger U.S. dollar and the improving outlook for India’s sugar output, as the nation’s crucial monsoon rains continue to strengthen.
India’s Monsoon Improvement and Output Prospects
The prospect of enhanced sugar production in India, the world’s second-largest producer, stems from recent favorable weather reports. India’s Meteorological Department indicated on Wednesday that the country’s cumulative monsoon rainfall, as of July 22, was 19% below normal. This marks a substantial improvement from the 42% below normal recorded on June 30, signaling a potential recovery for sugarcane crops. Despite this recent positive shift, the broader outlook remains cautious, with India’s Earth Science Ministry having previously warned that this year’s monsoon could be the weakest in 11 years. Furthermore, India’s weather office recently adjusted its cumulative rainfall estimate for the June-September monsoon season downwards to 90% of the long-term average, a reduction from its April forecast of 92%.
Countervailing Bullish Pressures and Market Dynamics
The current dip in sugar prices follows a period of sharp rallies, driven by a confluence of factors that had previously fueled supply concerns. NY sugar, for instance, reached a 2.25-month nearest-futures high on July 8, while London sugar posted a 10.5-month high on July 7. These gains were largely underpinned by fears that weak monsoon rains in India would depress sugar yields and reduce the country’s sugarcane harvest. Beyond weather, the market has also seen underlying support from a surge of more than +6% in WTI crude oil (CLQ26). Higher oil prices are bullish for ethanol, incentivizing sugar mills globally, particularly in Brazil, to divert more sugarcane crushing towards ethanol production rather than sugar, thereby tightening global sugar supplies.
Adding to this, recent Commitment of Traders (COT) data from last Friday revealed that funds had boosted their long positions in ICE London white sugar by +716 in the week ended July 14, reaching a record 58,847 net-long positions, a level not seen since 2011. An excessively long position by funds could exacerbate any price downturn, as observed today.
Global Production Landscape and El Niño Threat
Global sugar production forecasts are further complicated by the looming threat of an El Niño weather pattern. The US Climate Prediction Center stated on July 8 that the El Niño event, which emerged across the equatorial Pacific last month, is likely to be one of the strongest in over 75 years. This phenomenon is expected to curb rainfall in Brazil, India, and Thailand—the world’s three largest sugar-producing regions—potentially disrupting harvests and tightening global supplies. This concern is reflected in various analytical reports. For the 2026/27 season, the International Sugar Organization (ISO) forecasts global sugar production to fall by -1.15% year-over-year to 180 MMT, projecting a global sugar deficit of -262,000 MT, specifically citing the potential impact of El Niño on harvests in India and Thailand. Similarly, StoneX on May 20 forecast a deficit of -550,000 MT for the same period, while Covrig Analytics cut its surplus forecast to 100,000 MT from a May estimate of 380,000 MT.
Regional Production Forecasts and Ethanol Diversion
Regional production figures underscore the complex interplay of weather and policy. In Brazil, Unica reported on June 22 that 2026/27 Center-South sugar production through May was 6.838 MMT, a -2.0% year-over-year decline, as millers prioritized ethanol production. The percentage of sugarcane used for sugar by Brazil’s mills dropped to 41.42% from 50.09% last year, with cane crushing for ethanol production rising to 58.38% from 49.91%. This shift prompted sugar trader Czarnikow on June 11 to cut its global 2026/27 sugar balance estimate from a surplus of 1.4 MMT to a deficit of -100,000 MT. Conab, in its initial report on April 28, forecast 2026/27 Brazilian sugar output to decline by -0.5% to 43.952 MMT, with ethanol output climbing by +7.2% year-over-year to 29.259 million liters. The USDA’s Foreign Agricultural Service (FAS) predicted Brazil’s 2026/27 sugar production would fall by -3.0% year-over-year to 42.5 MMT.
For India, the Indian Sugar and Bio-energy Manufacturers Association (ISMA) revised its 2025/26 sugar production forecast on April 7 to 32 MMT, down from an earlier projection of 32.4 MMT, and projects 2025/26 sugar exports of 800,000 MT. India had introduced a quota system for sugar exports in 2022/23 following reduced production. However, the USDA on April 30 anticipated a 2026/27 sugar surplus in India of 2.5 MMT, marking the first surplus in two years. The USDA FAS further predicted India’s 2026/27 sugar production would increase by +12% year-over-year to 33.6 MMT, driven by favorable monsoon rains and increased sugar acreage. Conversely, FAS predicted Thailand’s 2026/27 sugar production would fall by -15.6% year-over-year to 9.5 MMT.
Global Balance and Consumption Outlook
The broader global picture, as presented by the USDA in its biannual report in May, projects global 2026/27 sugar production to fall by 6.5% year-over-year to 184.854 MMT, down from a record 186.056 MMT in 2025/26. Despite this anticipated decline in production, global 2026/27 human sugar consumption is expected to increase by +0.4% year-over-year to a record 179.991 MMT. The USDA also forecast that 2026/27 global sugar ending stocks would increase by 2.0% year-over-year to 44.410 MMT. The ISO, on May 18, had forecasted a record global sugar crop for the 2025/26 season at 182 MMT, up +3.5% year-over-year, and raised its 2025/26 global sugar surplus estimate to 2.2 MMT from a February forecast of 1.22 MMT, a significant rebound from a -3.46 MMT deficit in 2024-25.
Today’s decline in sugar prices underscores the immediate impact of improving weather conditions in India and a stronger dollar on commodity markets. While the short-term outlook is influenced by India’s monsoon recovery, the market remains attuned to a complex array of factors, including the persistent diversion of sugarcane to ethanol production in Brazil and the potential long-term disruptions posed by a strong El Niño event across key sugar-producing regions. The interplay of these diverse supply and demand dynamics will continue to shape global sugar prices in the coming seasons.
