Sugar futures fell on Thursday, extending recent weakness as improving monsoon conditions in India raised expectations for larger output. New York world sugar No. 11 for October settled lower at -0.07, or -0.48%, while London ICE white sugar No. 5 for October closed down -1.70, or -0.37%.
The selloff came as market participants weighed a near-term production upside from India’s weather outlook against longer-dated concerns tied to El Niño risks for key growing regions.
Key takeaways
- Price move: October New York world sugar No. 11 fell -0.07 (-0.48%) and October London ICE white sugar No. 5 dropped -1.70 (-0.37%).
- Catalyst: Pressure increased after India’s monsoon rainfall improved, with cumulative rainfall reported below normal but notably better than earlier in the season.
- Supply signals: Analysts also cited rising global deficit estimates for 2026/27, which provided some support.
- Weather backdrop: El Niño expectations continue to underpin caution for Brazil, India and Thailand, but near-term India weather appears to be improving.
- Implication: The market remains split between short-term weather relief and longer-run production uncertainty, keeping volatility elevated.
What drove the move
Risk for sugar prices eased on Thursday as India’s monsoon picture improved. India’s Meteorological Department reported that cumulative monsoon rainfall was 15% below normal as of July 29, improving from 42% below normal on June 30. The earlier warning from India’s Earth Science Ministry had suggested this year’s monsoon could be among the weakest in 11 years, but the latest readings pointed to less severe dryness than feared.
Because India’s monsoon runs from June through September, the market is focused on whether rainfall deficits persist or normalize during the remainder of the season. For sugar traders, improved moisture conditions can translate into better crop prospects and—eventually—more production, which tends to weigh on prices.
Market reaction and the debate over supply
Even as prices declined, the fundamental backdrop is not uniformly bearish. On the demand-and-balance side, Green Pool Commodity Specialists raised its estimate for the global 2026/27 sugar deficit to -3.3 million metric tons (MMT) from a June estimate of -1.76 MMT. StoneX also lifted its 2026/27 deficit forecast to -1.7 MMT, citing an improvement from a May estimate that was previously as low as -550,000 metric tons.
That support reflects a broader market debate: whether deficits later in the cycle will outweigh near-term production optimism. The report flow includes multiple forecasts that point in different directions depending on the assumptions for weather and the ability of producers to shift cane toward ethanol versus sugar.
Weather risks: near-term improvement vs El Niño concerns
While Thursday’s weakness aligned with improving monsoon data for India, traders continued to monitor the potential impact of El Niño on rainfall patterns. The US Climate Prediction Center said the El Niño pattern developing across the equatorial Pacific is likely to be one of the strongest in more than 75 years, with the expectation that it could curb rainfall in Brazil, India and Thailand—three of the world’s largest sugar-producing regions.
In addition, India’s weather office recently lowered its cumulative rainfall estimate for the June–September monsoon season to 90% of the long-term average, down from a forecast of 92% issued in April. That adjustment did not reverse the improvement seen versus June, but it underscores that the season remains sensitive to further shifts in rainfall trends.
Production and balance factors beyond rainfall
Producers’ ability to divert sugarcane toward ethanol has also been part of the market framework. Unica reported that Brazil’s Center-South sugar production through May in the 2026/27 season totaled 6.838 MMT, down 2.0% year over year, as mills increased ethanol output. The share of cane used for sugar fell to 41.42% from 50.09%, while the portion used for ethanol rose to 58.38% from 49.91% a year earlier. That dynamic can limit sugar availability even if cane supplies are ample.
Other balance discussions have pointed to shifting expectations. Czarnikow reduced its global 2026/27 sugar balance estimate from a surplus of 1.4 MMT to a deficit of -100,000 metric tons, citing conditions in which mills produce more ethanol than sugar amid stronger crude oil prices.
Broader baseline forecasts also feed into the market’s range of outcomes. The International Sugar Organization projected a record global sugar crop for the 2025/26 season and raised its surplus outlook. For 2026/27, however, it forecast lower production and a global deficit, explicitly linking the outlook to El Niño-related harvest risks in India and Thailand. The USDA, in a May biannual view, projected global 2026/27 sugar production falling year over year and rising consumption, while ending stocks were expected to increase.
Meanwhile, USDA estimates for regional production include expectations of declining Brazil output, rising India production supported by favorable monsoon conditions and increased acreage, and a decrease for Thailand.
What to watch next
Traders are likely to keep focusing on updates to monsoon rainfall in India, since Thursday’s slide aligned with improved precipitation data. In parallel, attention will remain on weather developments tied to El Niño and on subsequent production and balance revisions from industry groups and government-linked agencies. Upcoming signals on rainfall trajectory and the evolving 2026/27 crop outlook could determine whether sugar prices stabilize or extend the downward move into the next session.
