El Nino Threatens Global Sugar Supplies as Drought and Floods Loom

Goldman Sachs has warned that a Super El Niño weather pattern could severely impact global sugar markets. The investment bank believes that approximately 70% of worldwide sugar exports originate from Brazil, India, and Thailand, regions vulnerable to El Niño-related drought and flood conditions.

Drought during the sugarcane growing season can lower cane yields, decreasing the amount of sugarcane produced per hectare. Floods during harvest periods can disrupt harvesting operations and reduce the sugar content of cane, cutting sugar output even when cane volumes remain strong.

A weaker crop resulting from El Niño-related droughts may redirect more sugarcane into ethanol production, as corn serves as an important feedstock for ethanol alongside sugarcane. This would leave less sugar available for export markets.