El Nino Weather Pattern Triggers Global Sugar Shortage Fears
The current El Nino weather pattern is causing significant issues for global sugar production. This year's El Nino is being referred to as a 'Super El Nino', with record-breaking water temperatures and widespread drought affecting major sugar-producing countries. According to an AI conversation, the last strong El Nino was in 2015-2016, which resulted in drought damage to cane production in Asia and abnormal rainfall issues in other regions, leading to tighter world sugar supplies and higher prices.
The current Sugar #11 market is bullish, with nearby sugar trading at around 17.5-18 cents per pound, a 30% increase from earlier 2026 lows. The market's expectations are supported by forecasts indicating a shift from a global surplus in 2025/26 to a deficit of 200,000-260,000 metric tons in 2026/27 due to lower production forecasts for India and Thailand, possible El Nino-related crop damage, heavy Brazilian rains, and stronger oil prices encouraging Brazilian mills to produce ethanol instead of sugar.
Region-by-region forecasts indicate that India will experience below-normal monsoon rainfall, causing drought stress and lower sugarcane yields. Thailand is expected to face frequently drier conditions, reduced cane growth, and lower crushing volumes. Australia may see hotter and drier conditions in important cane-growing areas, reducing yields where irrigation is limited.