Goldman sees El Niño threatening global sugar supply chain

A Super El Niño weather pattern could tighten global sugar markets, as approximately 70% of worldwide sugar exports originate from Brazil, India, and Thailand, regions vulnerable to El Niño-related drought and flood conditions, according to Goldman Sachs.

The investment bank outlined four mechanisms through which El Niño could reduce exportable sugar supplies. Drought during the sugarcane growing season can lower cane yields, decreasing the amount of sugarcane produced per hectare. Floods during harvest periods can disrupt harvesting operations and reduce the sugar content of cane, cutting sugar output even when cane volumes remain strong.

A weaker corn crop resulting from El Niño-related droughts may redirect more sugarcane into ethanol production, as corn serves as an important feedstock for ethanol alongside sugarcane. This would leave less sugar available for export markets.

Concerns about El Niño-related production losses may trigger precautionary export restrictions, which Goldman views as a larger risk for global supply than potential crop losses themselves.

The El Niño pattern is expected to run from June 2026 through May 2027. Goldman identified several key periods to monitor during this timeframe.

Through October 2026, the main near-term downside risk to sugar prices is a recovery in sugar content in Brazil’s ongoing harvest. Heavy rainfall through June reduced sugar content despite strong sugarcane volumes, but rainfall has since moderated.

Continued drought in India and Thailand during the growing season through October 2026 could reduce sugarcane volumes harvested from November 2026 through April 2027. India has already banned sugar exports through September 2026 and removed import duties on sugar, raising the possibility that the country could shift from a major exporter, representing roughly 6% of global sugar exports, toward a net importer.

From October 2026 through April 2027, Goldman will focus on Brazil’s 2027 sugarcane growing season, where drought could reduce sugarcane volumes harvested from April through October 2027.

From January through April 2027, drought during Brazil’s corn growing season could weaken the corn crop harvested from April through September 2027, increasing sugar-based ethanol demand and leaving less sugar available for export.