Global Sugar Surplus Widens as Its Sugar Output Surges in Major Producing Nations

Sugar prices have entered a sustained weakness phase, with March NY futures (SBH26) falling -0.43 cents to close at -2.93% on Friday, while March London ICE white sugar #5 (SWH26) dropped -7.10 cents (-1.72%) in the same session. The downward pressure has intensified throughout the week, pushing NY sugar to a 2.5-month low and London sugar to a five-year low. Market participants increasingly recognize that a substantial global surplus is building, driven by accelerating production across multiple countries and rising export intentions from key suppliers.

Sugar Futures Plunge to Multi-Year Lows on Supply Glut Concerns

The sharp decline reflects growing consensus among commodity analysts regarding oversupply conditions. Green Pool Commodity Specialists forecasts a 2.74 MMT global surplus for 2025/26, with an additional 156,000 MT expected in 2026/27. StoneX independently projects an even larger global surplus of 2.9 MMT for the current season. These projections paint a bearish picture for price recovery in the near term, as the market absorbs news of expanding inventories and limited demand growth.

Covrig Analytics has been particularly aggressive with its surplus estimates, raising its 2025/26 forecast to 4.7 MMT in December, up from 4.1 MMT estimated in October. However, Covrig anticipates market rebalancing by 2026/27, when weak prices are expected to discourage further production expansion, reducing the projected surplus to 1.4 MMT.

Major Producers Boost Their Sugar Output for 2025/26 Season

Brazil maintains its position as the world’s largest sugar supplier, with significant production growth supporting the global surplus narrative. Conab, Brazil’s crop forecasting agency, raised its 2025/26 sugar production estimate to 45 MMT in November, up from a previous forecast of 44.5 MMT. The U.S. Department of Agriculture projects Brazil’s 2025/26 production will reach a record 44.7 MMT, representing a 2.3% year-over-year increase. Adding to the supply pressure, Unica reported that Brazil’s cumulative Center-South sugar output through December climbed 0.9% year-over-year to 40.222 MMT, while the ratio of cane crushed specifically for sugar rose to 50.82% from 48.16% in the prior season, signaling intensified focus on sugar production over ethanol generation.

India’s surge in its sugar output is reshaping global trade dynamics. The India Sugar Mill Association (ISMA) reported that sugar production from October 1 through January 15 reached 15.9 MMT, up 22% year-over-year. More significantly, ISMA raised its full-season 2025/26 estimate to 31 MMT from a previous 30 MMT forecast, representing an 18.8% year-over-year jump. The USDA projects even higher production at 35.25 MMT for the 2025/26 season, a 25% increase attributed to favorable monsoon rains and expanded sugar acreage. Critically, ISMA adjusted downward its estimate for sugar diverted to ethanol production to 3.4 MMT from a previous 5 MMT forecast, potentially freeing up an additional 1.6 MMT for export markets.

India’s increased export intentions are directly weighing on prices. The government lifted restrictions on sugar sales abroad, permitting mills to export 1.5 MMT during the 2025/26 season. This represents a significant policy shift from India’s restrictive export quota system implemented in 2022/23 following production constraints. India ranks as the world’s second-largest sugar producer and a decisive player in export markets.

Thailand, the world’s third-largest producer and second-largest exporter, continues to expand its sugar footprint. The Thai Sugar Millers Corp projected a 5% year-over-year increase in the 2025/26 crop, reaching 10.5 MMT. The USDA estimates Thailand’s production at 10.25 MMT for the season, a 2% year-over-year gain.

Multiple Agencies Project Significant Global Surplus; Its Sugar Supply Dynamics Reshape Markets

The International Sugar Organization (ISO) forecasted a 1.625 million MT surplus for 2025/26 following a 2.916 million MT deficit in 2024/25, with increased production in India, Thailand, and Pakistan driving the reversal. ISO projects global sugar production will rise 3.2% year-over-year to 181.8 million MT. Conversely, sugar trader Czarnikow provided the most aggressive surplus projection at 8.7 MMT for 2025/26, representing a 1.2 MMT increase from its September estimate.

The USDA’s bi-annual report released December 16 projected global 2025/26 sugar production climbing 4.6% year-over-year to a record 189.318 MMT. Simultaneously, global human consumption is forecast to increase only 1.4% to a record 177.921 MMT, highlighting the production-consumption imbalance. The USDA also projects that global ending sugar stocks will decline 2.9% year-over-year to 41.188 MMT, suggesting that despite production records, commercial stocks remain in a defensive posture.

Long-Term Outlook: Production Moderates but Surplus Pressures Persist into 2026/27

While the 2025/26 season faces pronounced surplus conditions, Safras & Mercado suggested some relief may emerge in 2026/27. The consulting firm projects Brazil’s sugar production will contract 3.91% to 41.8 MMT in 2026/27 from the expected 43.5 MMT in 2025/26. Brazil’s sugar exports are similarly forecast to decline 11% year-over-year to 30 MMT. These projections suggest that weak prices will eventually constrain expansion, creating natural production cycles within the industry.

The broader market reality is that global its sugar production in the current season is firmly in oversupply territory. Price recovery appears unlikely until market participants digest current surplus levels and production moderates in response to sustained weak pricing. For now, the structural abundance of global sugar supplies—reflecting aggressive expansion across Brazil, India, and Thailand—continues to dominate price direction, challenging participants seeking fundamental support for commodities.