Global Sugar Market Faces Sustained Pressure as Major Producers Ramp Up Output

The global sugar industry is experiencing significant downward pressure on prices, with market participants ranging from large-scale production companies to international traders facing headwinds from mounting supply surpluses. March NY world sugar #11 futures fell 0.02 (-0.14%), while March London ICE white sugar #5 dropped 1.60 (-0.39%), extending a prolonged decline that has driven NY sugar to a 2.5-month low and London sugar to a 5-year low. This sustained weakness reflects a fundamental supply-demand imbalance expected to persist through 2026.

Record Production Forecasts Reshape Global Sugar Supply Dynamics

Multiple forecasting organizations have revised their surplus estimates upward, painting a bearish picture for sugar traders and production companies. Green Pool Commodity Specialists projects a 2.74 MMT global sugar surplus for 2025/26, with an additional 156,000 MT surplus expected in 2026/27. StoneX has taken an even more cautious stance, forecasting a 2.9 MMT global sugar surplus for 2025/26. The divergence in these estimates underscores the complexity of global supply chains, where production decisions by major sugar companies in different regions create cumulative market effects.

Covrig Analytics initially raised eyebrows with its December assessment, revising the 2025/26 global sugar surplus upward to 4.7 MMT from 4.1 MMT. However, the firm projects a narrowing surplus of 1.4 MMT for 2026/27, suggesting that weakened prices may eventually discourage production among competitive sugar companies. Meanwhile, commodity trader Czarnikow has positioned itself for sustained oversupply, estimating an 8.7 MMT surplus for 2025/26—a notably aggressive forecast compared to other market participants.

Brazil: Powerhouse Production Amid Market Pressure

Brazil’s sugar industry stands at the center of global market dynamics, with production forecasts consistently revised upward by key organizations. Conab, Brazil’s official crop forecasting agency, estimates 2025/26 sugar production at 45 MMT—a 2.3% year-over-year increase to record levels. Unica’s January data confirmed that cumulative Center-South sugar output through December rose 0.9% year-over-year to 40.222 MMT, with sugar crush ratios rising to 50.82% in 2025/26 from 48.16% in 2024/25, indicating that Brazilian sugar companies are prioritizing sugar production over ethanol.

The USDA’s Foreign Agricultural Service (FAS) corroborates this trajectory, projecting Brazil’s 2025/26 production at a record 44.7 MMT. However, consulting firm Safras & Mercado introduces a critical turning point: the firm forecasts that Brazil’s 2026/27 production will decline 3.91% to 41.8 MMT, with sugar exports falling 11% year-over-year to 30 MMT. This expected downturn suggests that while current-season pressure on sugar prices persists, future market relief may emerge as production normalizes among Brazilian sugar companies.

India’s Export-Led Supply Surge Intensifies Market Competition

India’s sugar mills represent the world’s second-largest production cluster, and recent policy shifts have dramatically altered global supply dynamics. The India Sugar Mill Association (ISMA) reported in January that India’s 2025/26 sugar output from October 1-January 15 surged 22% year-over-year to 15.9 MMT. In November, ISMA raised its full-season 2025/26 production estimate to 31 MMT from 30 MMT—an 18.8% year-over-year increase driven by favorable monsoon conditions and expanded sugar acreage.

The USDA’s FAS projects even more robust growth, forecasting India’s 2025/26 production at 35.25 MMT, a 25% year-over-year surge. Critically, ISMA has cut its estimate for sugar destined for ethanol production in India to 3.4 MMT from an earlier 5 MMT forecast, freeing up export capacity. India’s government cleared the way for additional exports after the food secretary indicated permission for mills to export additional quantities beyond the 1.5 MMT quota established for the 2025/26 season. This policy reversal—India introduced export quotas in 2022/23 to protect domestic supplies—signals aggressive export positioning among India’s sugar companies seeking to offload inventory.

The International Sugar Organization (ISO) identified India’s increased output as a primary driver of the forecasted 1.625 MMT global surplus for 2025-26, following a 2.916 MMT deficit in 2024-25. India’s willingness to export has become a structural headwind for international sugar prices, as competing production companies in Brazil, Thailand, and other regions face margin compression from elevated global supplies.

Thailand’s Growth Trajectory Amid Regional Competition

Thailand, the world’s third-largest producer and second-largest exporter, is also expanding its footprint. The Thai Sugar Millers Corp projected in October that Thailand’s 2025/26 sugar crop will increase 5% year-over-year to 10.5 MMT. The USDA’s FAS offers a slightly more conservative forecast of 10.25 MMT for 2025/26 production, still representing solid year-over-year growth of 2%.

Thailand’s expansion reflects broader global trends, where sugar companies across multiple regions are simultaneously pursuing higher output, creating an increasingly crowded export market and limiting pricing power.

Macroeconomic Implications for Market Participants

The USDA’s bi-annual December report quantified the scale of the imbalance: global 2025/26 sugar production is forecast to climb 4.6% year-over-year to a record 189.318 MMT, while global human sugar consumption is expected to increase only 1.4% year-over-year to 177.921 MMT. Global sugar ending stocks are projected to fall 2.9% year-over-year to 41.188 MMT, but this modest inventory drawdown masks structural oversupply. ISO forecasts a 3.2% year-over-year rise in global sugar production to 181.8 million MT in 2025-26, confirming that supply growth outpaces demand expansion.

For sugar trading companies, production firms, and export-oriented businesses, this environment of elevated supplies and constrained pricing represents a critical market inflection point. The multi-MMT surpluses projected by forecasters suggest that pressure will persist until production incentives decline sufficiently to rebalance supply. The divergence between short-term oversupply (2025/26) and moderating surplus projections (2026/27 at 1.4 MMT) suggests that only a sustained period of margin compression will ultimately restore equilibrium to global sugar markets.