Porto Alegre, June 29, 2026 – The Atlantic hurricane season is expected to occur simultaneously with El Niño and the Asian Monsoon season; raw sugar prices in New York are expected to move toward 18 cents by the end of the third quarter of 2026 and toward 20 cents by the end of the fourth quarter of the same year.
The third week of June is only beginning, but it already brings the overlap of three medium-term climate events that represent weather risks for sugarcane crops in the four largest producing origins around the world: India, Brazil, Thailand, and China. Together, these four countries account for just over 53% of global sugar supply, totaling 98.30 million metric tons out of total world production of 184.85 million metric tons.
The key weather-risk factor currently underway is El Niño, which is expected to overlap both with the Asian Monsoon season (from June to September) and with the North Atlantic hurricane season (which also extends from June to September this year). El Niño effectively formed in May 2026 and, according to the latest NOAA model forecasts, could persist until February 2027, long after the hurricane and Asian Monsoon seasons have ended, generating even longer-lasting effects on the market.
This is because Brazil’s Center-South sugarcane regions will experience exactly this type of extended impact. The rainy season in the Center-South will be affected both in timing and intensity. Normally, rainfall begins at weak-to-moderate levels in October, becomes moderate in November, and strengthens from December through March of the following year. However, SAFRAS & Mercado warns that in the 2026 season, the rainy season is expected to begin at moderate levels as early as August (without the typical weak-rain phase at the start of the cycle) and quickly intensify into heavy rainfall by September.
From October 2026 through February 2027, rainfall intensity is expected to remain strong to very strong, depending on the region. Although rainfall outlook maps for March 2027 are not yet available, the strengthening of rainfall from January to February next year suggests that March will very likely also be a month of very heavy precipitation. In the previous edition of this weekly sugar and ethanol report, we detailed the expected rainfall volumes for each month from August 2026 through February 2027. The practical consequence of this rainfall pattern will be slower crushing activity between August and September and the interruption of harvesting operations as early as October.
This interruption will be caused by the very heavy rains expected to develop beginning in October, a period when rainfall should normally only be starting. However, in 2026, rainfall will arrive earlier and with greater intensity, significantly affecting sugarcane harvesting two to three months before the official end of the 2026/27 crop season, which occurs during the first half of December. SAFRAS & Mercado expects that 5% of the 260 mills operating this season will end their crop early in August. Approximately 35% are expected to conclude operations in September, another 50% in November, and the remaining 10% in December.
This schedule alone would be enough to lift raw sugar prices in New York, but it will not operate in isolation. The first point is the overlap between El Niño and the Asian Monsoon season. In El Niño years, unlike Brazil, Asia tends to experience rainfall deficits during the Monsoon season. In 2023, SAFRAS & Mercado observed that the weak El Niño in place at the time reduced Monsoon rainfall in India by 12% to 14% relative to the 50-year historical average tracked by the country’s Meteorological Department.
Because the 2026 El Niño is expected to be “strong” to “very strong,” SAFRAS & Mercado expects India to record a rainfall deficit of 15% to 20% relative to its 50-year historical average. This represents another weather-risk factor for sugar prices, adding to the monitoring of the Center-South Brazil crop-ending schedule. However, these two factors are not isolated. There is also the North Atlantic hurricane season. NOAA stated in May that there is a 55% probability that the 2026 hurricane season will be below normal and a 35% probability that it will be near normal.
However, SAFRAS & Mercado points out that a hurricane season will still occur, and hurricanes affecting the Gulf of Mexico are expected to interrupt oil exploration activities on certain occasions. As a result, raw sugar will receive support from the oil market for further upward price movements, in addition to the effects of El Niño on Asian Monsoon rainfall and on the early end—by two to three months—of the Center-South Brazil sugarcane crop.
But the question remains: why has sugar continued to decline in New York during the first half of June? SAFRAS & Mercado notes that this movement basically reflects three lines of reasoning.
The first is the continuation of the global sugar surplus between supply and demand as projected by the USDA. In its two semiannual reports published in 2025, the USDA projected a surplus of 11 million metric tons. In its first semiannual report of 2026, the USDA reduced the 2025/26 surplus from 11 million to 6 million metric tons and projected a new surplus of 4 million metric tons for the 2026/27 season. At that time, SAFRAS & Mercado had already warned that the interpretation of the data would depend heavily on investor sentiment and perspective.
Some market participants could view the figures through the lens of a half-full glass, focusing on the smaller surplus levels projected for both 2025/26 and 2026/27. However, nearly 20 days after the USDA report, SAFRAS & Mercado observes that international speculative traders have in fact interpreted the data through the more pessimistic half-empty-glass perspective, emphasizing the continuation of surpluses rather than their reduction.
Indeed, in the view of market participants, sugar prices in New York will only rise based solely on the global supply-and-demand balance if a deficit emerges. Therefore, SAFRAS & Mercado warns that the currently declining surplus levels between the 2025/26 season (the current global crop year, running through September 2026) and the 2026/27 season (the upcoming global crop year, running from October 2026 through September 2027) would need to become deficits for prices to react more clearly, which is far from being the case at the moment.
The second factor is the progress of sugarcane crushing in Brazil’s Center-South, which is moving toward the seasonal peak. The current crop season will not begin ending until August, with more significant effects being felt in September. Therefore, from now through the first half of August, sugarcane crushing and sugar production will continue increasing every two weeks as the crop approaches peak production. Consequently, the short-term bearish influence resulting from the seasonal progression of the 2026/27 Center-South harvest will remain active in the market at least through August and into the second half of the month.
The third factor is that international market participants follow a “seeing is believing” approach. This means they are waiting to actually see a “strong” to “very strong” El Niño develop and to observe substantial Monsoon rainfall deficits in Asia before taking long positions in raw sugar futures.
As an example, even the announcement by India’s Meteorological Department, which raised its projected rainfall deficit from 8% to 10% between April and May, failed to generate a bullish reaction in New York sugar prices during that period.
