Global Sugar Prices Rise to Year-to-Date Highs: Probability of Strong El Niño Rises to 81%, India Bans Sugar Exports Until End of September

Global raw sugar futures rose this week to their highest level in over a year, as the continuing intensification of the El Niño climate phenomenon sparked concerns about production cuts in major sugar-producing countries, making sugar prices a focal point in the recent commodities market.

According to Reuters, the U.S. Climate Prediction Center stated last Thursday that the El Niño phenomenon is continuing to strengthen, with the probability of an extremely strong El Niño event occurring during the Northern Hemisphere's autumn and winter of 2026–2027 exceeding 90%. This warning directly impacted sentiment in the global sugar market, with raw sugar futures touching a more-than-one-year high of 17.11 cents per pound last week.

The El Niño climate pattern has diametrically opposite effects on major global sugar producers, creating a situation of multiple overlapping pressures on the supply side and making the market increasingly cautious about the global sugar supply outlook for the 2026–2027 season.

El Niño Impacts Production Regions in Multiple Countries, Supply Concerns Intensify Across the Board

The threat of El Niño to the global sugar supply chain is evident across multiple dimensions. For Brazil, the world's largest sugar producer, El Niño typically brings excessive rainfall in the second half of the year, which may interfere with the sugarcane harvesting process and lower the quality of raw sugar.

Meanwhile, India, the world's second-largest sugar producer, and Thailand, the second-largest exporter, face the opposite risk—the El Niño climate pattern usually reduces summer monsoon rainfall, adversely affecting sugarcane growth.

Negative news also came from Ukraine. According to data released by the country's National Meteorological Forecast Center on Thursday, Ukraine's sugar beet production in 2026 is expected to drop to 9 million metric tons, a significant decline of approximately 23% from the previous year's 11.7 million metric tons, further exacerbating expectations of tight global sugar supplies.

White Sugar Strengthens in Tandem, Cocoa and Coffee Markets Diverge

As raw sugar futures strengthened, white sugar futures also rose in tandem, closing at $511.50 per ton on Thursday, a gain of 0.9%.

The cocoa market was also boosted by El Niño factors. ICE London cocoa futures rose 1% to £4,197 per ton, while New York cocoa futures simultaneously gained 1% to $5,780 per ton. Traders stated that market expectations of El Niño conditions leading to a partial decline in West African cocoa production for the 2026–2027 season are providing support for prices. Additionally, Ghanaian cocoa farmers are pressuring President John Dramani Mahama regarding a new law restricting land use rights, requesting a suspension of the bill's signing until farmers' opinions are fully consulted. This policy uncertainty is also having some impact on market sentiment.

The coffee market, however, showed weaker performance. ICE Arabica coffee futures fell 0.7% to $3.1760 per pound, with traders pointing out that recent earthquakes in Colombia have disrupted local coffee exports.

In summary, the expectation of intensifying El Niño, reduced sugar beet production in Ukraine, and uncertainty regarding rainfall prospects in India and Thailand constitute the core drivers behind the current rise in sugar prices. As the Northern Hemisphere's autumn and winter approach, if an extremely strong El Niño event materializes as expected, actual production cut data from major producing regions will become the key observation window for the next phase of the market. Climate risk premiums are expected to continue supporting sugar prices.