Global Sugar Markets Pressured by Ample Commodity Supplies

Sugar markets extended their downward pressure on March 17, with New York world sugar #11 (SBH26) declining 0.02 cents to -0.14%, while London ICE white sugar #5 (SWH26) fell 1.60 cents to -0.39%. The decline reflects ongoing bearish sentiment driven by ample global sugar supplies and robust production forecasts across major producing regions. New York sugar has fallen to a 2.5-month low, while London sugar has touched a 5-year low, signaling the intensity of supply-side pressure on valuations.

Prices Slide on Surplus Forecasts and Ample Production Outlook

Multiple commodity specialists have raised their global surplus estimates, reinforcing downward price momentum. Green Pool Commodity Specialists forecasts a 2.74 MMT (million metric ton) global sugar surplus for 2025/26 and a smaller 156,000 MT surplus for 2026/27. Similarly, StoneX projects an even larger global surplus of 2.9 MMT in 2025/26, indicating that ample inventories are expected to persist through the season. These forecasts underscore the structural oversupply challenging prices, with higher production offsetting stable demand growth.

The international outlook has become increasingly bearish as multiple agencies elevated their surplus estimates in recent months. Covrig Analytics raised its 2025/26 global surplus forecast to 4.7 MMT in December, up from 4.1 MMT projected in October. The International Sugar Organization (ISO) forecasts a 1.625 million MT surplus in 2025-26, following a deficit year in 2024-25. Meanwhile, sugar trader Czarnikow boosted its 2025/26 surplus estimate to 8.7 MMT, signaling that ample supply conditions may persist longer than initially expected.

Brazil and India Drive Record Global Output

Brazil remains the world’s largest sugar producer, and production growth there is a major supply driver. Unica reported that Brazil’s cumulative 2025-26 Center-South sugar output through December rose 0.9% year-over-year to 40.222 MMT, with cane crushed for sugar increasing to 50.82% in 2025/26 from 48.16% in 2024/25. Conab, Brazil’s crop forecasting agency, raised its 2025/26 Brazil sugar production estimate to 45 MMT in November, suggesting record output is likely. The USDA’s Foreign Agricultural Service (FAS) projects Brazil’s 2025/26 production at 44.7 MMT, up 2.3% year-over-year, representing record levels.

India, the world’s second-largest sugar producer, is experiencing an even more dramatic production surge. The India Sugar Mill Association (ISMA) reported on January 19 that India’s 2025-26 sugar output from October 1 through January 15 reached 15.9 MMT, up 22% year-over-year. The ISMA raised its full-season 2025/26 India sugar production estimate to 31 MMT in November, up 18.8% year-over-year from the previous forecast of 30 MMT. The USDA’s FAS is even more bullish, projecting India’s 2025/26 production at 35.25 MMT, representing a 25% year-over-year increase driven by favorable monsoon rains and expanded sugar acreage. Notably, India cut its estimate for sugar used for ethanol production to 3.4 MMT from an earlier 5 MMT forecast, potentially freeing additional volumes for export.

Thailand, the world’s third-largest producer and second-largest exporter, is also boosting output. The Thai Sugar Millers Corp projected Thailand’s 2025/26 crop will increase 5% year-over-year to 10.5 MMT. The USDA projects a more modest 2% year-over-year increase to 10.25 MMT. Combined, these three nations are driving the ample supply conditions pressuring global prices.

Export Dynamics Add to Supply Pressures

Policy shifts on sugar exports are amplifying supply pressures. India’s government signaled in November that it may permit additional sugar exports to address a domestic supply glut, with the food ministry approving 1.5 MMT of sugar exports in the 2025/26 season. India originally introduced a quota system for sugar exports in 2022/23 after late rains had constrained domestic supplies. Now, with ample production, export restrictions are being relaxed, bringing additional volumes to global markets.

This policy shift reflects India’s intention to manage surplus production by redirecting it to export channels rather than accumulating domestic stocks. The prospect of higher exports from India—the world’s largest sugar exporter by volume in recent years—adds to the bearish outlook, as global markets absorb these volumes.

Longer-Term Headwinds May Moderate Supply Growth

While near-term supply pressures remain intense, some forecasts suggest relief may arrive in subsequent seasons. Consulting firm Safras & Mercado forecast on December 23 that Brazil’s sugar production in 2026/27 will fall 3.91% to 41.8 MMT from an expected 43.5 MMT in 2025/26. Brazil’s sugar exports are also expected to decline 11% year-over-year to 30 MMT in 2026/27, providing some eventual relief to global oversupply conditions.

Covrig Analytics projects that the 2026/27 global sugar surplus will fall to 1.4 MMT from the 4.7 MMT estimate for 2025/26, suggesting that weak prices may discourage new production expansion. However, this moderation remains dependent on production incentives holding throughout the current season.

Market Outlook: Navigating Ample Supply Dynamics

The USDA’s bi-annual report released on December 16 projected global 2025/26 sugar production climbing 4.6% year-over-year to a record 189.318 MMT, with human consumption rising only 1.4% year-over-year to 177.921 MMT. Global sugar ending stocks are forecast to fall 2.9% year-over-year to 41.188 MMT, indicating that ample production is being drawn down but surplus conditions persist.

The structural mismatch between robust production growth and slower consumption expansion creates a challenging environment for prices. The outlook for ample supplies across multiple regions—combined with policy-induced export growth from major producers like India—suggests downward price pressure will likely persist through the 2025/26 season. Market participants monitoring the sector should watch for any shifts in production intentions or demand patterns that could alter the current balance of ample supply versus constrained demand.