El Nino is significantly disrupting global sugar production, transforming a market once oversupplied into one facing an impending deficit for the 2026-2027 season. The weather phenomenon is impacting major producers—Brazil, India, and Thailand—creating adverse conditions that have led analysts to predict tighter global sugar supplies and higher prices.
At the start of the year, sugar markets were anticipating a surplus, but El Nino’s effects have reversed that outlook. Raw sugar futures have climbed more than 25% since July amid concerns about reduced output. The climate anomaly is generating heavy rainfall in southern hemisphere regions key to sugarcane cultivation while exacerbating drought conditions in parts of Asia, notably northern India and Thailand.
Brazil, the world’s largest producer, has seen excessive rain disrupt cane harvesting and processing. Recent precipitation in key growing areas reached up to four times the usual levels, delaying mills’ crushing operations. Many processing facilities have lost several days of activity and may be unable to extend the milling season due to forecasted December rains. This disruption could reduce Brazilian sugar exports by approximately two million tonnes, according to José Pessoa, who manages sugarcane operations in Brazil’s centre-south and northeast.
In India, the monsoon season ended with the weakest rainfall since 2015, casting doubt on the country’s sugar production in the current season. Output is estimated near 30 million tonnes, with low stock levels offering limited buffer against further declines. Thai sugar producers are also struggling, with rainfall in the northeast sugarcane belt running at about two-thirds of the 30-year average. This shortfall is expected to reduce Thai sugar production by at least 17%, potentially dropping below 10 million tonnes. Thai farmer Suntorn Nongkhunsarn cited drought and disease as key challenges impacting their crop.
El Nino’s impact extends to beet sugar regions in the Northern Hemisphere. The United States is facing drought conditions that have delayed beet harvesting in some areas, raising concerns about exposure to damaging weather as the phenomenon intensifies through year-end. Europe, particularly France, has experienced extreme heat waves linked to El Nino, leading to the worst sugar beet harvest in over a decade. France’s output is projected to be the lowest since 1980, contributing to a worldwide squeeze in sugar supplies.
These production challenges are contributing to rising global sugar prices, which have increased 18% in 2026, second only to vegetable oils in the United Nations food price index. The sugar sector’s sensitivity to El Nino effects has attracted substantial speculative investment, with sugar futures open interest reaching record levels and hedge funds adopting their most bullish stance in years.
Traders and analysts note that while market positioning may have amplified recent price gains beyond fundamental supply factors, the threat posed by El Nino remains a significant driver of uncertainty. Beyond sugar, El Nino is also affecting other commodities sensitive to weather fluctuations, including rice, cocoa, coffee, and palm oil, signaling broader risks for global agricultural markets and food inflation.