Global Sugar Surge Undercuts Prices Amid Record Production Forecasts

Sugar prices are facing significant headwinds as global production climbs to historic levels. March New York sugar (#11) declined 0.15 cents (-1.01%), while March London ICE white sugar (#5) fell 3.70 points (-0.90%), with London sugar touching a 2.5-month low. The primary catalyst: a worldwide surge in sugar output that is systematically undercutting price levels across both major contracts.

Brazil’s Record Output Weighs on Market

Brazil’s trajectory as the world’s leading sugar producer is intensifying downward pressure on prices. Unica reported that the country’s cumulative 2025-26 Center-South sugar production through December reached 40.222 MMT, reflecting a 0.9% year-over-year increase. More significantly, Brazil’s crush ratio for sugar production rose to 50.82% in 2025/26, up from 48.16% in the prior season, indicating a deliberate shift of production capacity toward sugar at the expense of ethanol output.

Looking ahead, Conab raised its 2025/26 Brazil sugar production forecast to 45 MMT from 44.5 MMT, underscoring the structural supply boom. However, a slight silver lining emerged in longer-dated forecasts: Safras & Mercado projected that Brazil’s 2026/27 sugar production will contract by 3.91% to 41.8 MMT from an expected 43.5 MMT in 2025/26, with exports anticipated to fall 11% year-over-year to 30 MMT. The USDA’s Foreign Agricultural Service similarly positioned Brazil’s 2025/26 production at a record 44.7 MMT, up 2.3% year-over-year.

India’s Expanded Export Quotas Amplify Global Surplus Pressure

India’s role in supply overhang cannot be overstated. The India Sugar Mill Association (ISMA) reported that India’s 2025-26 sugar output from October 1 through January 15 already reached 15.9 MMT, up 22% year-over-year. More critically, ISMA in November elevated its full-year 2025/26 production estimate to 31 MMT from a prior 30 MMT forecast—a robust 18.8% year-over-year gain fueled by favorable monsoon conditions and expanded sugar acreage.

Adding fuel to the bearish price dynamic, ISMA cut its estimate for sugar diverted to ethanol production to 3.4 MMT from an earlier 5 MMT projection, effectively freeing additional supply for export markets. The Indian government’s policy stance reinforces this outlook: in November, India’s food ministry authorized mills to export 1.5 MMT of sugar in the 2025/26 season after reintroducing export quotas that had been in place since 2022/23. This liberalization—driven by a domestic supply glut—is particularly destabilizing to prices globally. The FAS forecast that India’s 2025/26 production will spike 25% year-over-year to 35.25 MMT, driven by benign weather and expanded acreage.

Thailand’s Rising Production Adds to Global Glut

Thailand, the world’s third-largest sugar producer and second-largest exporter, is contributing additional supply pressure. The Thai Sugar Millers Corp projected a 5% year-over-year increase in the 2025/26 crop to 10.5 MMT. The USDA forecasted Thailand’s 2025/26 output at 10.25 MMT, up 2% year-over-year, though this represents a slightly more conservative view than local industry projections.

Global Surplus Forecasts Signal Bearish Price Outlook

The cumulative effect of increased production across the world’s top three sugar exporters is crystallizing in elevated global surplus projections—a dynamic that consistently undercuts price levels. The International Sugar Organization (ISO) forecast a 1.625 million metric ton surplus for 2025-26, a dramatic swing from a 2.916 million metric ton deficit in 2024-25. ISO attributed this pivot to surging production in India, Thailand, and Pakistan, projecting a 3.2% year-over-year jump in global sugar production to 181.8 million MT in 2025-26.

Covrig Analytics painted an even more expansive surplus picture, raising its 2025/26 estimate to 4.7 MMT from 4.1 MMT. Sugar trader Czarnikow took a more aggressive stance, boosting its global 2025/26 surplus estimate to 8.7 MMT, up 1.2 MMT from a September estimate of 7.5 MMT. The USDA’s December report provided the broadest production outlook, projecting global 2025/26 sugar production climbing 4.6% year-over-year to a record 189.318 MMT, while global human consumption is forecast to rise only 1.4% to 177.921 MMT.

Market Mechanics: When Supply Outpaces Demand

The structural imbalance between rising production and modest consumption growth creates the foundation for sustained downside price pressure. The USDA forecasted that 2025/26 global ending sugar stocks will decline only 2.9% year-over-year to 41.188 MMT despite record production, a counterintuitive outcome reflecting the sheer magnitude of the supply overhang. While Covrig Analytics anticipates that the 2026/27 global sugar surplus will contract to 1.4 MMT as weak prices discourage further expansion, near-term relief appears distant.

The outlook remains decidedly unfavorable for price recovery. With multiple forecasting agencies in consensus around global surplus conditions, India actively liberalizing export policies, and Brazil maximizing sugar crush ratios, the market framework that will undercut prices in coming months appears firmly entrenched.