What happened
Thailand's sugar production could decline by at least 17% in the 2026-2027 season, starting in October, according to the Thai Sugar Millers Corp. The industry body's head, Rangsit Hiangrat, said output might fall below 10 million tonnes, down from 12 million tonnes the previous season.
The expected drop is linked to a strengthening El Nino, which typically brings dry weather to South and Southeast Asia. The U.S. National Oceanic and Atmospheric Administration (NOAA) forecasts a high probability that the current El Nino will become a 'very strong' super El Nino by the 2026-2027 winter, potentially the strongest in 75 years.
Thailand's northeastern region, which accounts for about 45% of the country's sugar output, has seen lower rainfall this year. Additionally, relatively high cassava prices may encourage farmers to switch crops.
Why it matters
Thailand is the world's second-largest sugar exporter, and together with Brazil and India, it accounts for about 70% of global sugar exports. A significant production shortfall in Thailand could tighten global supply, especially as India's monsoon rains have also been below normal.
The International Sugar Organization projects a global supply deficit of about 260,000 tonnes in the upcoming season due to El Nino's impact on Asian crops. This supply risk has already pushed New York sugar futures up over 20% last month, the largest monthly gain since 2010.
Key facts
Thailand's sugar output may fall below 10 million tonnes in the 2026-2027 season, down from 12 million tonnes.
The northeastern region of Thailand, contributing about 45% of sugar output, has experienced lower rainfall.
NOAA predicts a high chance of a 'very strong' El Nino by the 2026-2027 winter, possibly the strongest in 75 years.
Thailand, Brazil, and India together supply about 70% of global sugar exports, with Thailand at about 10%.
What to watch next
Monitor the development of the El Nino and its impact on rainfall in Thailand and other sugar-producing regions.
Watch for potential shifts in Thai farmers' crop choices, as higher cassava prices might reduce sugarcane planting.
Track global sugar prices and supply-demand balances, as the projected deficit could lead to further price volatility.