El Niño could push the global sugar market from surplus into deficit
The global sugar market could shift from an expected surplus to a deficit in the new season due to the impact of a powerful El Niño. Raw sugar futures have risen by more than 25% since July as weather conditions deteriorated.
The biggest risks are emerging in key producing countries, including Brazil, India and Thailand. In Brazil, excessive rainfall is slowing sugarcane harvesting and processing, while precipitation in some major growing areas has recently been several times above normal.
Lost processing days at Brazilian mills could reduce the country’s sugar exports by around 2 mln tons. This is adding to concerns over global supply, as Brazil is the world’s largest sugar producer and exporter.
In India, a weak monsoon is weighing on yields, while sugar-producing regions in Thailand are facing drought. In Europe, severe heat has contributed to the weakest sugar beet crop in more than a decade.
If adverse weather persists, lower production and exports could keep global sugar prices elevated. The impact of El Niño may also spread to other agricultural markets, including rice, cocoa, coffee and palm oil.
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