Sugar Prices Plummet Amid Crude Oil Crash, El Niño Looms

Sugar prices plummeted to one-week lows on Monday amid declining crude oil prices. The October NY world sugar #11 (SBV26) and October London ICE white sugar #5 (SWV26) both closed lower, with the former down -0.19 (-1.29%) and the latter down -2.40 (-0.52%). This drop is partly due to crude oil prices falling over 7% on Monday.

However, concerns about a potential El Niño event may provide a boost to sugar prices in the long run. The US Climate Prediction Center warned that the El Niño weather pattern emerging across the equatorial Pacific will likely be one of the strongest in more than 75 years, which could curb rainfall in major sugar-producing regions such as Brazil, India, and Thailand.

Recent data from Unica shows that Brazil's sugar production through May is down -2.0% year-over-year, while cane crushing for ethanol production has risen to 58.38%. This shift may lead to a boost in sugar supplies worldwide. In contrast, India's weather office lowered its cumulative rainfall estimate for the June-September monsoon season last Friday.

The International Sugar Organization (ISO) forecasts a global sugar deficit of -262,000 MT for the 2026/27 season, citing potential impacts from an El Niño event on harvests in India and Thailand. Other estimates predict a surplus or deficit ranging from -100,000 to -550,000 MT.