Sugar: Coface Points to El Niño, Ethanol and Export Restrictions
In a study published on November 9, 2026, credit insurer Coface attributed the upward pressure on sugar prices to three supply-side factors: the El Niño episode, the rise of ethanol and export restrictions.
Written by sector economist Simon Lacoume, the analysis focuses on the global sugar market and not on the activities of the group.
Coface Links the Rise in Sugar to Lower Production
According to Coface, sugar prices have continued to rise since the start of the autumn, while most agricultural commodities have lost momentum.
Since early September, the S&P GSCI Agriculture index has fallen by 16%, while the sugar-specific index has gained 1%. Raw sugar exceeded $450 per tonne in mid-October, a high not seen in almost two years.
In a context of stable demand, the study attributes price movements to supply conditions. It cites the International Sugar Organization, which forecasts a global deficit of 0.2 million tonnes for the 2026/2027 season, after a surplus of 1.1 million tonnes in the previous season. Coface believes this deficit could be larger than anticipated.
In Brazil, the world's leading producer with 23.5% of global output, rains in September and early October in the Center-South disrupted the end of the harvest. From March to the end of September, the volume of cane crushed fell by 2.9% year on year, to 510 million tonnes.
In India (16% of world production), the southwest monsoon ended with a rainfall deficit of 12.6%. Thailand (6%), the second-largest exporter, is expected to see its production decline by 17%, to fewer than 10 million tonnes, with El Niño weighing on output, according to Coface, at least until the first quarter of 2027.
In the European Union (8%), summer heatwaves, unrelated to El Niño, affected sugar beet. Sugar production there is expected to fall by 20% in the 2026/2027 season, to 13.5 million tonnes.
Ethanol and Indian Restrictions Strengthen Brazil's Position
The study identifies a shift in favor of ethanol. Brazil raised its mandatory ethanol blending rate from 30% to 32% in July, until January 2027, and India reached as early as 2025 its 20% target, originally set in 2018 for 2030.
According to Coface, the rise in oil prices since the beginning of the war in Iran has reinforced this trend.
In Brazil's Center-South, the share of cane allocated to sugar fell below 47% over the first five months of the season, compared with nearly 53% a year earlier. In mid-October, on a comparable basis, sugar production was down 14.6% year on year, while ethanol production rose 4.3%.
India, the world's second-largest exporter until 2023, almost entirely banned its sugar exports in May 2026. It opened an import quota of 1 million tonnes of raw sugar until October 31 and prohibited the use of cane to produce ethanol from November 1.
According to Coface, these measures should keep Indian supply for domestic consumption at 28 million tonnes in 2026/2027, as in the previous season. The economist considers that this policy increases the dependence of the global market on Brazil, which already accounts for 55% of exports, and therefore its vulnerability to a localized production shock.
