Sugar prices surged on Friday, with July NY world sugar #11 rising 0.93% and August London ICE white sugar #5 climbing 2.94%. This uptick is largely attributed to emerging concerns over an El Niño weather pattern, which could lead to a subpar monsoon season in India, the second-largest sugar producer globally. The Indian weather office revised its rainfall forecast for the June-September monsoon season down to 90% of the long-term average, triggering short covering in sugar futures.
The potential impact of El Niño is significant, as it threatens rainfall in key sugar-producing regions, including Brazil, India, and Thailand. This has led to projections of a global sugar deficit in the 2026/27 season, with the International Sugar Organization forecasting a production decline of 1.15% year-over-year. Additionally, India’s ongoing export ban on sugar until September 30 is further tightening supply, supporting higher prices.
Market professionals should note that the combination of adverse weather forecasts and supply constraints is likely to sustain upward pressure on sugar prices in the near term, making it crucial to monitor weather developments and production forecasts closely.
Source: nasdaq.com