Global Sugar Market Faces New Headwinds as India Ramps Up Production Forecast

The sugar market is experiencing significant downward pressure as major producing nations signal robust harvests for the 2025-26 season. Recent updates from industry bodies and agricultural forecasters paint a picture of ample global supplies, reshaping the commodity outlook.

India Sugar Production Surge Weighs on Prices

India sugar production figures released by the India Sugar Mill Association (ISMA) in recent weeks have become a key driver of market sentiment. The ISMA raised its production estimate for the 2025/26 season to 31 MMT, representing an 18.8% year-on-year increase from previous expectations. More dramatic is the near-quarter performance, with October-December 2025 production reaching 11.90 MMT—a 25% jump compared to 9.54 MMT in the same period last year.

This robust expansion is reshaping India’s export strategy. The ISMA also reduced its ethanol allocation estimate to 3.4 MMT from a prior July projection of 5 MMT, effectively freeing up additional supplies for international markets. India’s government has signaled its willingness to permit higher exports, with November announcements allowing mills to export 1.5 MMT during the 2025/26 season as domestic supplies exceed near-term demand.

Price Declines Reflect Supply Optimism

March New York world sugar #11 futures dropped 2.40% today, closing at new 2-week lows, while March London ICE white sugar #5 fell 1.87%. This retreat reflects a confluence of production increases across multiple regions globally.

Brazil’s Record Output Tempers Bull Case

Brazil’s sugar production outlook remains decidedly constructive for suppliers but bearish for prices. The USDA’s Foreign Agricultural Service (FAS) projects Brazil will achieve a record 44.7 MMT in 2025/26, up 2.3% year-on-year. Conab, Brazil’s domestic crop forecasting agency, elevated its 2025/26 estimate to 45 MMT in early November, signaling sustained production strength.

However, forward-looking estimates suggest moderation ahead. Consulting firm Safras & Mercado forecasts a 3.91% decline in Brazil’s 2026/27 production to 41.8 MMT from the expected 43.5 MMT in 2025/26. Exports are projected to fall 11% year-on-year to 30 MMT in that future season.

Recent data from Unica tracked cumulative Center-South output through November 2025-26 at 39.904 MMT, representing 1.1% year-on-year growth. The crush allocation toward sugar production rose to 51.12% in the current season versus 48.34% the previous year, indicating mills’ preference for sugar over ethanol.

Broader Global Supply Dynamics

Production increases extend beyond India and Brazil. The International Sugar Organization (ISO) forecast a 1.625 million MT surplus for 2025-26 following a 2.916 million MT deficit in 2024-25, with gains concentrated in India, Thailand, and Pakistan. ISO projects global production will climb 3.2% year-on-year to 181.8 million MT.

Thailand, the world’s third-largest producer, is projected to increase output 5% to 10.5 MMT according to the Thai Sugar Millers Corp, with the USDA’s FAS estimating a more modest 2% gain to 10.25 MMT. As the second-largest exporter globally, Thailand’s production decisions carry outsized market significance.

The USDA’s comprehensive December 16 report forecast global production climbing 4.6% to a record 189.318 MMT, while human consumption would rise only 1.4% to 177.921 MMT. This consumption-production imbalance is the fundamental driver behind current price weakness. Global ending stocks are projected to decline 2.9% despite the production surge, though absolute levels remain elevated at 41.188 MMT.

Sugar trader Czarnikow quantified the pressure more starkly, upgrading its 2025/26 global surplus estimate to 8.7 MMT in November, a 1.2 MMT increase from September projections, reflecting downside risks for price support. With the USDA’s FAS estimating India’s output reaching 35.25 MMT—a 25% year-on-year increase driven by favorable monsoon rains and expanded acreage—the weight of supply remains a headwind for the foreseeable future.