ICE and NY sugar futures rose on Tuesday, extending gains for a fourth session as investors weighed new weather risks in major producing regions. July New York world sugar settled higher, while August London ICE white sugar also closed up, with NY prices marking a six-week high.
The main driver was renewed concern that weak monsoon rains in India could reduce sugarcane yields and shrink the country’s harvest. That backdrop, however, was tempered by earlier relief signals tied to global shipping conditions and by forecasts that Brazil could redirect more cane toward ethanol production.
Key takeaways
- Prices moved higher: July NY sugar closed up for a fourth straight session, and August London ICE white sugar also finished higher.
- Catalyst: Investors focused on India’s monsoon outlook, with rainfall reported as running well below normal.
- Supply-risk debate: El Niño-driven dryness could weigh on crops in India and other key regions, supporting prices despite periods of easing supply disruption.
- Brazil’s diversion matters: Reports that Brazil’s mills are using more cane for ethanol have added support to tighter sugar balance expectations.
What drove the move
Tuesday’s strength was linked to weather-related supply concerns. India’s Meteorological Department reported that cumulative monsoon rainfall was 42% below normal as of June 29, and the Earth Science Ministry warned that this year’s monsoon could be the weakest in 11 years. India’s monsoon season runs from June through September.
Investors also looked to broader signals tied to El Niño. On June 17, Japan’s Meteorological Agency confirmed an El Niño pattern had formed across the equatorial Pacific. According to the article’s cited assessments, the emergence of El Niño could curb rainfall in Brazil, India and Thailand—together among the world’s largest sugar-producing regions. India’s weather office recently lowered its June-September cumulative rainfall estimate to 90% of the long-term average, down from a 92% forecast issued in April. The US NOAA estimated a 67% probability that a “Super El Niño” could occur this year.
Market reaction and the counterweights
The contract gains came after a pullback earlier in the month that the article attributed to easing global supply disruption. Last Monday, NY sugar fell to a two-month low after the reopening of the Strait of Hormuz, which was expected to reduce shipping rates, insurance costs and fuel prices—factors that can lower importers’ landed costs.
Currency dynamics also played a role in the earlier decline. The article noted that a stronger US dollar weighed on sugar prices, citing the dollar index reaching a 13-month high last Wednesday. A firmer dollar generally makes commodities priced in the currency more expensive for buyers holding other currencies.
Against that backdrop, Tuesday’s turn higher suggests traders refocused on weather-driven yield risk rather than near-term logistics and FX.
Brazil ethanol diversion and revised balance views
Alongside India’s monsoon concerns, the article pointed to Brazil supply-demand signals affecting sugar availability. It cited Unica’s report from last Monday that 2026/27 Brazil Center-South sugar production through May was 6.838 million metric tons, down 2.0% year over year, as millers increased ethanol output. The share of sugarcane used for sugar fell to 41.42% from 50.09%, while the proportion allocated to ethanol production rose to 58.38% from 49.91% last year.
In addition, sugar trader Czarnikow cut its global 2026/27 sugar balance estimate on June 11, reducing the outlook from a surplus of 1.4 million metric tons to a deficit of 100,000 metric tons. The article linked that adjustment to the broader theme of Brazil producing more ethanol than sugar as crude oil prices surged.
How forecasts frame the supply outlook
Multiple earlier forecasts in the article highlight why El Niño risk remains central to the market’s forward curve. Conab’s initial report for the new season projected 2026/27 Brazilian sugar output would decline by 0.5% to 43.952 million metric tons, while ethanol output was expected to rise 7.2% year over year to 29.259 million liters. The USDA’s April forecast similarly put 2026/27 Brazilian sugar production at 42.5 million metric tons, down 3% year over year, citing the same shift toward ethanol crushing.
For India, the article cited industry and government-related projections. It referenced the Indian Sugar and Bio-energy Manufacturers Association revising its 2025/26 production outlook to 32 million metric tons and projecting exports of 800,000 metric tons. The article also noted India introduced export quotas in 2022/23 after late rain curtailed production and limited domestic supplies.
For 2026/27, the International Sugar Organization forecasted that global sugar production would fall 1.15% year over year to 180 million metric tons, with a global deficit of 262,000 metric tons, citing potential El Niño impacts on harvests in India and Thailand. The article also referenced other private estimates: StoneX projected a deficit of 550,000 metric tons, while Covrig Analytics reduced its surplus view to 100,000 metric tons from a May estimate of 380,000 metric tons.
Earlier, the USDA’s bi-annual view projected that 2025/26 global sugar production would rise 4.6% year over year to a record 189.318 million metric tons and that global ending stocks would decline 2.9% year over year to 41.188 million metric tons. The same USDA-linked set of figures in the article projected increases in production across Brazil, India and Thailand for 2025/26, driven by weather and acreage assumptions.
Bigger picture: what investors will watch next
Tuesday’s rise keeps attention on monsoon conditions and the timing and strength of El Niño. Traders will likely monitor updates to rainfall forecasts for India’s June-September season, along with any new changes to Brazil’s ethanol-versus-sugar processing mix that can tighten or loosen near-term supply.
In the near term, market focus should also stay on global macro inputs that can influence commodity demand and pricing—particularly the US dollar direction and crude oil moves—along with further supply-balance updates from major agencies and industry participants.
