India recorded its driest June in 146 years last week leaving a 42% rainfall deficit as of June. The India Meteorological Department has already lowered its full-season forecast to 90% of the Long Period Average and the APEC Climate Centre puts the probability of strong El Niño conditions persisting from July to December at 99.4%.
Sugar, soybean, molasses, corn, and dairy markets are all pricing in the same risk at once.
Source: India Meteorological Department (IMD)
What Triggered the Repricing
Brazil was already under pressure before India’s monsoon stalled. sugar output in Brazil’s Centre-South region fell 25.6% year-on-year, as rainfall disrupted harvesting and mills diverted more cane to ethanol on better margins.
India’s monsoon failure with rainfall 42% below normal, sugarcane cultivation in Maharashtra and Punjab faces serious stress, while soybean sowing is already lagging behind normal levels in the state.
Recognizing the growing risk, the Ministry of Agriculture and the Indian Council of Agricultural Research (ICAR) have identified 111 priority districts with limited irrigation coverage requiring closer monitoring.
Source: Price Watch™
Where Markets Could Move Next
NY sugar jumped to a 5-week high on Friday as traders reacted to the twin supply shock. If July and August rainfall remains weak, the most critical months for kharif growth, sugarcane yields in Maharashtra will fall, directly reducing C-heavy molasses availability into the October-March crushing season.
Soybean prices in India are already running at four-year highs, and with sowing lagging in Maharashtra, the lean period could extend well into Q1 2027.
European corn is currently pollinating under extreme heat in Germany and Poland, while US corn sits near 8-month price lows on surplus supply.
The Questions Worth Asking Right Now
What if Brazil’s Ethanol switch and India’s monsoon failure have together flipped the global sugar balance from surplus to deficit in a single week , how many other markets on your buying list are one weather event away from the same reversal?
Price Watch™ tracks daily molasses benchmarks alongside soybean ex-Amravati spot rates, sugar mill crush data Global dairy benchmarks across Butter, SMP, and WMP in Germany, New Zealand, Australia, and the USA.
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