Green Pool sees global sugar supply falling 6.58 million tonnes short in 2026-27

Sugar prices rose in India a few months ago, and now a major and surprising development has emerged on supply, just ahead of the festival season. Market analysis firm Green Pool Commodities has estimated that the global sugar market could face a shortfall of 6.58 million tonnes in 2026-27. Weather and poor crop yields are said to be the main reasons.

As a result, sugar prices have kept rising in both international and domestic markets. Sugar production has fallen sharply in Brazil, India and the European Union. The reduced supply has pushed prices up steeply, and the burden is now set to fall on ordinary households.

In Brazil, unseasonal and very heavy rain linked to El Nino has cut sugar production by 14 per cent compared with last year. Green Pool has lowered its estimate of sugar output in Brazil's central-south region by 600,000 tonnes to 37.3 million tonnes.

Sugar production in the European Union is also expected to fall because of bad weather. A long, hot and dry summer hurt the sugar beet crop. Green Pool has therefore revised its estimate for the bloc's output, cutting it by 228,000 tonnes to 12.44 million tonnes. Green Pool believes these estimates could be lowered further. If that happens, supply in Europe's sugar market will tighten and the region's import demand could also be affected.

In India, stocks are limited, so the government has decided to begin crushing of the new sugarcane crop early. Even so, a supply shortfall is expected in India. The problem is that if cane is cut before it is fully mature, sugar output could fall by 300,000 to 400,000 tonnes. Rain was scanty in Maharashtra and Karnataka in the last phase of the monsoon, making matters harder.

Water shortages could lead to restrictions on the use of reservoir water for farming, which could further threaten future production. Amid the severe supply shortage, raw sugar futures in the international market have reached a 19-month high of 21.29 cents per pound. Where prices go from here will depend on actual production and weather conditions in Brazil, India and the European Union (EU).