Porto Alegre, September 17, 2026 \u2013 The sugar and ethanol market enters September 2026 facing an important change in the nature of weather fundamentals. El Ni\u00f1o, which could previously be treated as a potential risk to production in the coming crops, is now beginning to show characteristics of a more intense and longer-lasting phenomenon, with direct implications for sugarcane and sugar beet supply in the main producing regions. The September climate monitoring update shows a probability of just over 80% that El Ni\u00f1o will persist through May 2027, while Pacific surface temperatures moved from a positive anomaly of 2.40\u00b0C in July to 3.50\u00b0C in August. At the same time, deeper Pacific waters show anomalies between 8\u00b0C and 10\u00b0C at depths of 25 meters; last month, these higher temperatures were located at a depth of 50 meters. The projected scenario points to the phenomenon peaking between October 2026 and January 2027, precisely when the new international sugar season will be taking shape.<\/p>\n
For the sugar market, the main consequence of this configuration lies in the possibility that the 2026\/27 international crop will begin with lower supply precisely when a recovery in physical availability would normally be expected. The season beginning in October is expected to find important producing regions under the influence of a potentially more intense weather phenomenon, reducing the capacity for production recovery in countries that are already showing signs of losses. This condition is particularly important because supply problems are no longer concentrated in a single origin. The European Union, India, Thailand, China and Brazil are now showing different degrees of production risk, creating a combination that reduces the international market\u2019s ability to offset losses in one region with increased production in another.<\/p>\n
In the European Union, this process is already showing signs of materializing. The latest estimates used in market reports point to a 19% reduction in 2026\/27 crop supply, with volume declining from 16.55 to 13.40 million metric tons. The sequence of revisions also deserves attention because it shows that the perception of losses has been increasing as new weather data are incorporated. The European Commission had previously worked with a smaller reduction, while the estimate from the European Union Sugar Market Observatory later began to indicate a more significant decline. Tereos\u2019 estimate of one of the smallest sugar beet crops in decades, with a sharp decline in yields, reinforces the perception that the weather problem is already producing concrete effects on supply.<\/p>\n
India represents another source of fundamental pressure. Reduced monsoon rainfall, associated with lower expected sugarcane yields, has been accompanied by government measures to increase domestic sugar availability. SAFRAS & Mercado\u2019s estimate points to a 3.80 million metric ton reduction in Indian production, taking supply from 33.60 to 29.80 million metric tons, in a market where domestic demand remains close to 29 to 30 million metric tons. The need for imports becomes even more relevant under this scenario. The government authorized imports of up to 1 million metric tons of sugar through October, and the industry had already contracted approximately 800 thousand metric tons of this quota. This represents an important sign of tightness because India, in addition to producing less, is beginning to compete for sugar on the international market to replenish its domestic availability.<\/p>\n
India\u2019s behavior also demonstrates that the market is entering a phase in which stocks are playing an increasingly important role in price formation. The reduction in domestic stocks from approximately 6 million to 3.5 million metric tons at the end of the 2025\/26 crop reduces the ability to absorb new supply shocks. The need to bring forward crushing for the new season and increase sugar availability in October reinforces the perception that the Indian crop could begin with a smaller cushion. Therefore, imports should not be interpreted merely as an increase in global supply, but also as evidence that a major producing origin is facing difficulties in balancing its own domestic market.<\/p>\n
Thailand and China complete the picture of deteriorating Asian supply. Estimates used in the reports point to a reduction of approximately 2 million metric tons in Thai production and 900 thousand metric tons in Chinese production. As a result, the potential loss in India, Thailand and China alone exceeds 6.7 million metric tons. When the projected reductions in Europe and Brazil are added, the scenario points to a supply decline of more than 12 million metric tons among the main international producers.<\/p>\n
It is precisely this simultaneity of losses that changes the market\u2019s interpretation. The problem is no longer merely a weather expectation concerning a particular country. There is simultaneous deterioration across different origins, while the International Sugar Organization has already revised the global balance from a surplus of 1.1 million metric tons to a deficit of approximately 200 thousand metric tons. The shift from surplus to deficit is one of the most important signals for shaping expectations because it reduces the market\u2019s safety margin and increases the importance of remaining stocks.<\/p>\n
In Brazil, the situation needs to be interpreted differently. The Center-South still has greater sugarcane availability than in the previous season, but this does not automatically mean higher sugar production. Conab\u2019s second estimate for 2026\/27 indicated crushing of 645.70 million metric tons, 4.78% above the previous season, while sugar production was estimated at 39.51 million metric tons, down 3.12% year over year. The difference between these two movements is fundamental to interpreting the market: there is more sugarcane, but not necessarily more sugar, because the allocation of ATR toward ethanol continues to exert a significant influence on the production mix.<\/p>\n","protected":false},"excerpt":{"rendered":"
Porto Alegre, September 17, 2026 \u2013 The sugar and ethanol market enters September 2026 facing an important change in the nature of weather fundamentals. El Ni\u00f1o, which could previously be treated as a potential risk to production in the coming crops, is now beginning to show characteristics of a more intense and longer-lasting phenomenon, with […]<\/p>\n","protected":false},"author":15,"featured_media":24953,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[102],"tags":[],"commodity":[34],"class_list":["post-65434","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-agribusiness-en","commodity-sugar-and-ethanol"],"acf":[],"yoast_head":"\n