Raw Sugar Futures Up 34% Since July as Brazil Rains and El Niño Threaten Supply

Raw sugar is one of the best-performing corners of the grocery supply chain right now, and the weather is the reason.

The March 2027 NY #11 contract closed Thursday, Oct. 15, at 21.13 cents per pound, up 0.29 cents, or 1.39%, on the day. In mid-July the same contract traded at 15.77 cents, a gain of roughly 34%. Measured from the July 31 low of 15.28 cents, the rise is about 38%. London white sugar for December delivery gained 1.12% Thursday. NY sugar hit a 19-month nearest-futures high Wednesday, and London hit a 22-month high the week before.

Brazil is waterlogged

Brazil is the world's largest producer. Its Center-South cane region has been soaked. Donald Keeney, a senior agricultural meteorologist at Vaisala Xweather, said rainfall in some major producing areas ran as much as four times normal over the past month.

The rain has slowed harvesting and disrupted crushing at mills. José Pessoa of Grupo José Pessoa said the disruption could cut Brazil's exports by about 2 million tonnes. He said mills may not be able to extend crushing into December to make up lost days, because more heavy rain is expected.

India and Thailand add to the squeeze

India's Meteorological Department said cumulative monsoon rainfall from June through September finished 12.6% below normal, the weakest in 11 years. India is the second-largest sugar producer. Production forecasts have dropped to around 30 million tonnes, according to Chini Mandi's account of Datamar News reporting. Eder Vieito, CEO of Green Pool Commodity Specialists, said inventories drawn down after the earlier surplus leave India little room to absorb another weak crop.

On Aug. 20, India's Directorate General of Foreign Trade said it would allow up to 1 million tonnes of raw sugar imports free of tax until Oct. 31. India is normally an exporter and last imported sugar in large volumes in the 2017-18 season.

Thailand, the second-largest exporter, is also short on water. Vaisala said rainfall in the northeast, the country's biggest cane region, ran about two-thirds of the 30-year average. The Thai Sugar Millers Corp said on Sept. 7 that 2026/27 output could fall 17% from a year earlier to about 10 million tonnes.

Sugar beets are struggling too. Drought has delayed harvesting in parts of the United States, and heat damaged crops in Europe. Expana says France is heading for its weakest beet output since at least 1980.

From surplus to deficit

The market began the year well supplied. The forecasts have flipped.

The International Sugar Organization projected on Sept. 1 a 2026/27 global deficit of 200,000 tonnes, against a 1.1 million tonne surplus in 2025/26. Covrig Analytics said on Aug. 3 that it expects a 300,000 tonne deficit, after a June forecast of a 100,000 tonne surplus.

El Niño is the backdrop. Japan's Meteorological Agency has said the event will persist through the Northern Hemisphere winter and into the first quarter of 2027. The U.S. Climate Prediction Center has said it will likely be one of the strongest in more than 75 years. A strong El Niño tends to curb rainfall in India and Thailand, and Brazil's weather swings with it.

The case that this fades

Not everyone thinks the rally has legs. Rabobank expects Brazil's heavy rain to help next year's cane crop, which the bank says could weigh on prices in the second half of 2027. IG analyst Angeline Ong described the upside as potentially "a short-term story."

On the wider food picture, Cornell agricultural economist Christopher Barrett said developing countries face the biggest hit from El Niño. CNN's reporting on the event noted that many experts expect localized food crises, particularly in eastern and southern Africa, while global effects stay more limited.

Quartz makes a related point about attribution. Currency swings in Brazil, fertilizer shortages, shipping bottlenecks and export bans can push a commodity further than any climate pattern. Quartz also notes that crop shocks reach shelves with a lag, because weather passes through harvest, milling, export and manufacturing first.

Funds are heavily long

Speculators have piled in. The Commitment of Traders report showed funds added 60,442 long positions in the week ended Oct. 6, taking their net long in NY sugar to 212,559. That is the largest in more than three years. Open interest in sugar futures hit record levels this year.

That is a risk for anyone chasing the move. A crowded long position can accelerate a drop if the weather turns or funds start selling.

Where this meets the grocery bill

Sugar is one of the main inputs for candy makers, and the Halloween timing is hard to miss. But the futures rally has not shown up in a retail number yet, and there is no sourced estimate of what it adds to a bag of candy.

The price pressure at the register today comes from energy. The Consumer Price Index rose 3.7% in September from a year earlier. Regular gas averaged $4.33 a gallon the week of Oct. 12, up $1.21 from a year ago. West Texas Intermediate crude hit $101.91 on Oct. 14. Producer prices rose in September by the most in four and a half years, according to Reuters. The food-at-home index stood at 321.11 in September, just under its June peak of 321.446.

Sugar is a small piece of that picture. It lands on households already stretched by fuel, and the midterm elections are weeks away.

The next tells are the pace of Brazil's cane harvest and the monthly El Niño outlooks. India's duty-free import window closes Oct. 31. If Brazilian crushing speeds up, analysts at 24/7 Wall St. expect the rally to stall. If heavy rain continues, Pessoa's estimate of a 2 million tonne export hit is the number to watch.