Thailand, a major global sugar exporter, is facing a significant drop in its sugar output for the 2026/27 crushing season, with projections indicating a decline of at least 17%. This downturn is primarily attributed to a severe drought, potentially exacerbated by a "Super El Niño" event, which is expected to reduce sugarcane yields by an estimated 10%. The Office of Cane and Sugar Board (OCSB) announced a farm-gate price for sugarcane in 2025/26 of 890 baht per metric ton ($29/MT), a 23% decrease from the previous season and below the cultivation cost of approximately 1,358 baht/MT ($44/MT). This financial disincentive is prompting many smallholder farmers, particularly in the northeastern regions, to shift from sugarcane cultivation to alternative, more profitable crops like cassava.
The anticipated reduction in cane acreage is estimated to be between 1.5% and 6%, contributing to an overall decrease in sugarcane production to around 100 million tonnes from 106 million tonnes last season, or even as low as 86 million tonnes. Consequently, sugar production is forecasted to fall to approximately 10.0-10.3 million tonnes, a contraction of 1.7-2.0 million tonnes year-on-year. This expected drop in supply has led analysts like StoneX to forecast a 15% reduction in Thailand's sugar output to 10.2 million metric tons. The crushing season is scheduled from December 2026 to March 2027, involving 57 factories.
This decline in Thai sugar output is set to worsen the global sugar supply situation. The International Sugar Organization (ISO) estimates global sugar production will decrease by 1.1% year-on-year in 2026/27, leading to a supply gap of 262,000 tons. StoneX predicts a shift from a global surplus of 2.29 million tons in 2025/26 to a deficit of 550,000 tons in 2026/27. Khon Kaen Sugar Industry Plc (KSL) forecasts global sugar prices could reach around 17 cents per pound in 2027, up from about 16 cents currently. KSL has advised Thai sugar producers to slow exports and build inventories to mitigate the impact of lower production. Factors such as Brazil diverting sugarcane to ethanol production due to higher oil prices and India restricting sugar exports are also contributing to the tightening global market.
