Global Sugar Prices Face Sustained Pressure Amid Record Supply Levels

The commodity market continues to grapple with oversupply dynamics that are creating significant headwinds for valuations. On Monday, March New York world sugar #11 (SBH26) settled higher by 0.06 points (+0.41%), while March London ICE white sugar #5 (SWH26) finished lower by 4.70 points (-1.12%). The mixed performance reflects underlying tensions between technical factors—such as currency movements affecting the weaker dollar—and fundamental supply concerns that continue to dominate market sentiment for sugar prices.

Brazil’s Record Production Drives Downward Pressure on Valuations

The world’s largest sugar producer is set to deliver unprecedented output levels that are fundamentally reshaping market dynamics. Brazil’s Center-South sugar production through December reached 40.222 million metric tons (MMT), representing a year-over-year increase of 0.9% according to Unica. More notably, sugar production as a percentage of total cane crushing rose to 50.82% in the 2025/26 season from 48.16% in the previous year, indicating a deliberate shift toward maximizing sugar output at the expense of ethanol production.

Looking ahead, Brazil’s crop forecasting agency Conab projects that 2025/26 sugar production will reach 45 MMT, setting a new benchmark for global supply. However, forward-looking analysis from Safras & Mercado suggests that this record output will be followed by a contraction. The consulting firm anticipates 2026/27 production will decline to 41.8 MMT (a -3.91% drop), with exports expected to fall by 11% year-over-year to 30 MMT. This projection provides modest support to sugar prices in the medium term, though near-term valuations remain constrained by the current surplus environment.

India’s Production Surge and Export Expansion Impact Commodity Values

The second-largest sugar producer has emerged as a key factor limiting sugar prices this season. According to the India Sugar Mill Association (ISMA), India’s cumulative production from October 1 through January 15 reached 15.9 MMT, up 22% year-over-year. This production trajectory led ISMA to revise its full-year 2025/26 estimate upward to 31 MMT (an increase of 18.8% year-over-year), surpassing earlier forecasts of 30 MMT.

A critical development affecting sugar prices is the shift in India’s domestic policy priorities. The government has signaled willingness to expand sugar exports to manage an internal supply glut. India’s food ministry approved the export of 1.5 MMT in the 2025/26 season, representing a significant shift from the quota system implemented in 2022/23 when production constraints existed. Supporting this export expansion, ISMA reduced its forecast for sugar diverted to ethanol production to 3.4 MMT from a previous estimate of 5 MMT, freeing up additional volumes for international markets. This policy flexibility is expected to boost India’s overseas shipments substantially, adding downward momentum to global sugar prices.

Competing Supply Forecasts Highlight Ongoing Surplus Concerns

Multiple analytical firms and international organizations have converged on a sobering outlook for market balance sheets. The International Sugar Organization (ISO) forecasted a 1.625 million MT surplus in 2025-26, a dramatic reversal from the 2.916 million MT deficit recorded in 2024-25. ISO projects global production will climb 3.2% year-over-year to 181.8 million MT, with increased output from India, Thailand, and Pakistan driving the shift.

Covrig Analytics presented an even more bearish scenario, raising its 2025/26 global surplus estimate to 4.7 MMT in December, compared to 4.1 MMT projected in October. However, Covrig anticipates some relief ahead, forecasting the 2026/27 surplus will narrow to just 1.4 MMT as weak valuations discourage new production investments. Sugar trader Czarnikow took the most aggressive stance, estimating a 8.7 MMT global surplus for 2025/26—up 1.2 MMT from a September forecast of 7.5 MMT. These divergent projections reflect ongoing uncertainty, but consensus clearly points toward oversupply conditions that will continue weighing on sugar prices.

Thailand’s Output Growth Sustains Market Headwinds

Thailand, the world’s third-largest producer and second-largest exporter, is adding to supply pressures. The Thai Sugar Millers Corp projected that the 2025/26 crop will increase 5% year-over-year to 10.5 MMT. This expansion, while modest in absolute terms, represents another increment to global supply at a time when demand growth remains relatively subdued. The organization’s forecast signals that production momentum will remain supportive of higher supply availability, creating structural challenges for sugar prices to appreciate significantly.

USDA Paints Picture of Record Global Output and Constrained Consumption Growth

The U.S. Department of Agriculture’s bi-annual report released December 16 provided comprehensive projections that underscore the magnitude of supply pressures affecting valuations. USDA forecasts global 2025/26 sugar production will reach a record 189.318 MMT, representing a 4.6% year-over-year increase. By contrast, global consumption is projected to grow only 1.4% year-over-year to 177.921 MMT, revealing a stark imbalance where supply growth outpaces demand growth by a factor of more than three.

The USDA’s Foreign Agricultural Service (FAS) provided detailed country-level projections: Brazil’s output is expected to rise 2.3% year-over-year to a record 44.7 MMT, while India’s production is forecast to jump 25% year-over-year to 35.25 MMT, driven by favorable monsoon conditions and expanded acreage. Thailand’s output is projected to increase 2% year-over-year to 10.25 MMT. Globally, ending stocks are expected to decline only 2.9% year-over-year to 41.188 MMT, suggesting ample supply availability will persist throughout the season and continue exerting pressure on sugar prices heading into 2026.

The confluence of record production across multiple continents, policy-driven export expansions, and consumption growth lagging supply gains creates a challenging environment where sugar prices face structural headwinds unlikely to dissipate in the near term.