Global sugar supply faces deficit amid weather and production shifts

The global sugar market is facing significant supply pressures, with analysts forecasting a potential deficit for the 2026/27 season. This instability is driven by adverse weather conditions, specifically the El Niño phenomenon, which has disrupted monsoon rains in India and caused droughts in Europe.

In Brazil, the world’s leading producer, the Conab agency has lowered production forecasts as mills increasingly divert sugarcane toward ethanol production due to high oil prices. Similarly, India, the second-largest producer, is grappling with poor harvests and rising domestic prices, prompting the government to authorize duty-free imports of up to one million tons of raw sugar to stabilize availability.

European production is also under threat, with yields expected to reach a decade low. In regions like France and Germany, heatwaves and drought have severely impacted beet harvests. While retail prices in some markets like Greece have remained stable for now, the broader market shows rising futures contracts, with US sugar trading near its highest levels since May 2025.