Sugar prices have eased as India’s monsoon caught up, letting some of the weather risk premium built into recent weeks come out of the market.
The October raw sugar contract (No. 11) slipped to 14.88 US cents/lb on 14 July, and August white sugar (No. 5) fell to $463/mt. India’s southwest monsoon had a weak start but spread nationwide by 9 July, narrowing the rainfall deficit to 19% below normal by 13 July, from 42% below at the end of June. Progress has since slowed across major regions, and it will be months before it’s clear whether the rains were enough to secure the crop and head off late-season imports. Recent rallies also met producer hedging and expectations for a strong Brazilian crop.
That easing sits against a firmer longer-term backdrop. NOAA has raised the odds that the current El Nino builds into a high-intensity event in Q4 to 81%, from 63%, and now expects it to linger into next year. Vesper notes the shift has lifted volatility across coffee, cocoa and sugar, and should keep working as a backdrop for pricing. Funds have been steady buyers but haven’t yet turned net long.
In Brazil, the market is watching the sugar-versus-ethanol mix. Ethanol pricing weakened to some of its lowest levels since late 2024, and parity increasingly favours diverting cane to sugar. Growers are expected to lean toward sugar this season, and the market anticipates a cane crop of 630 to 650 million tonnes, though recent rains that slowed harvesting should benefit later cane development. Brazil also approved raising the anhydrous ethanol blend in gasoline to 32% from 30%.
In Europe, the picture is tighter. The European Commission’s Sugar Market Observatory pegged 2026/27 output at 14.13 million tonnes, down 15% year-on-year on lower planted area and weaker yields. Beet areas are running well below average on rainfall and higher temperatures, and Vesper flags that current pricing still reflects ample old-crop stock and softer demand, meaning weather risk isn’t yet in the price.
With a global balance set to tighten into deficit in 2026/27, how much of that weather risk the market ends up pricing is the open question.
Read the full sugar analysis here: https://app.vespertool.com/market-analysis/3212?commodity=sugar
