Raw sugar oversupply and whites tightening mean a stronger white premium

• UNICA and MAPA data remain closely aligned, confirming a 13% YoY drop in late-May crushing.
• Center-South performance is strong: 26/27 crushing is ~16% higher YoY, with TCH at 84.7 t/ha, signaling potential upside to current yield and crushing estimates (635 Mt). 
• EU beet outlook deteriorates due to weather conditions, with production seen lower YoY (14.6 Mt vs. 15.8 Mt), tightening regional supply. 
• India faces below-normal monsoon, prompting a possibly lower ethanol diversion (~3 Mt), and ~27.5 Mt production, limiting export availability and keeping import risk on the table. 
• Global dynamics diverge: strong Brazilian raws vs. tighter future Northern Hemisphere whites, supporting the white premium.

Over the past week, key fundamental developments continued to reinforce existing market expectations and trends, rather than signaling any material shift. Beginning with the latest UNICA release, the figures were broadly in line with the previous data from the Ministry of Agriculture (MAPA). For example, UNICA reported 41.5 Mt of cane crushing in the second half of May, compared to MAPA’s 41.2 Mt – both pointing to a 13% year-on-year decline. This alignment suggests that, even if UNICA adjust its reporting timing, the market will continue to rely on a timely and consistent benchmark for decision-making, even though UNICA data should remain the primary reference for the Center-South. 

Regarding the report, realized data points to a strong performance in Brazil’s Center-South. Although crushing was initially impacted by higher rainfall in May, cumulative volumes indicate an almost 16% increase in the 26/27 season compared to 25/26. Additionally, the agency reported yield data, with Total Cane per Hectare (TCH) reaching 84.7 t/ha cumulatively, supporting our forecast of 77.6 t/ha by the end of the season, with potential for further upside, and clearly higher than the 74.5 t/ha registered in the previous season. If this trend persists, it could lift yield expectations and add an upside to our estimates, now at 635 Mt. While we await data from June, it is important to note that, although recent rains may temporarily disrupt crushing, they are beneficial for late-season cane, reinforcing the bearish side through higher yield potential.

At this note, Monday 22nd closed at 13.35 c/lb, around 1.8% lower than the previous week closure. Still, other fundamental developments provided some support to prices throughout the week, including the European Commission’s Crop Monitoring Bulletin (JRC MARS – June 2026) and ongoing monsoon monitoring.

On the European side, persistent high temperatures and limited rainfall continue to weigh on key beet-producing regions such as southwestern Germany, eastern France, southeastern Poland, and parts of Ukraine. As a result, the agency forecasts beet yields to decline by 5% in 26/27 compared to 25/26, although still 2% above the five-year average. Combined with a reduction in planted area, this points to tighter availability in the coming months. Our estimate, including the UK, is of 14.6Mt in 26/27 compared to 15.8Mt in 25/26m already accounting for an average 1Mt diversion for ethanol. 

As for India, although the monsoon has recently gained momentum, the India Meteorological Department (IMD) still considers rainfall below normal, currently forecasting 90% of average levels. The implications of this dryness will become clearer in the coming months, potentially by August, but this trend has already led us to revise our outlook.

Given ongoing food inflation and policy considerations, we now expect lower ethanol diversion in 26/27 compared to the current season. Instead of approaching 4 Mt, diversion should remain closer to 3 Mt. As a result, and accounting for weather risks, India’s sugar production is estimated at around 27.5 Mt for 26/27. Even so, this would likely keep the country out of global export flows.

However, if El Niño impacts turn out stronger than expected, production could decline further, potentially pushing stocks below 3 Mt, an outcome that could lead the government to consider imports. Currently, El Niño is expected to be more intense than in previous occurrences, with probability estimates indicating an increasing chance of a very strong event between October 2026 and January 2027. For more information, check our El Niño especial edition report (link).

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