Goldman Sachs points out that approximately 70% of global sugar exports are concentrated in Brazil, India, and Thailand, all three major producing regions highly exposed to the risks of drought or flooding brought about by El Niño. NOAA assesses that the current El Niño has already formed and has a greater than 90% probability of developing into a "super El Niño" in the winter of 2026-2027. In such a highly concentrated supply market, weather risks can easily be amplified into global supply risks.
India is currently the most closely watched variable. Goldman Sachs states that rainfall in India's main sugarcane producing regions during this growing season has fallen below the historical 10th percentile, a trend very similar to the 2015/16 super El Niño, when India's sugarcane yield was about 9% lower than the long-term average. If the drought continues until October, the harvest season from November 2026 to April 2027 could be suppressed. More importantly, India's current inventory is already low, and it has banned sugar exports until the end of September 2026 while simultaneously eliminating import tariffs on sugar. India typically accounts for about 6% of global sugar exports. If production forecasts continue to be revised downwards, the market will need to trade not only the production cuts, but also the risk of India shifting from an exporter to a net importer.
