Global Sugar Prices Face Mounting Pressure from Record Production Forecasts

Sugar prices are grappling with sustained headwinds as major producing nations announce unprecedented output levels. The international sugar market is being reshaped by a convergence of factors: Brazilian mills are ramping up production, India is poised to dramatically increase exports, and Thailand continues its expansion as the world’s third-largest producer. These dynamics are creating a structural oversupply that’s challenging price stability across both New York and London trading exchanges.

Brazil Driving Record Output Expansion

Brazil’s sugar production trajectory remains particularly significant. The Brazilian crop forecasting agency Conab raised its 2025-26 production estimate to 45 MMT in November, making it the primary supply driver. What’s more notable is the operational shift: mills increased the proportion of cane crushed specifically for sugar production to 50.82% in 2025-26, compared to 48.16% in the prior year. This deliberate production strategy underscores how the surplus environment is prompting producers to maximize output. However, looking ahead to 2026-27, forecasters including Safras & Mercado project a modest contraction to 41.8 MMT, suggesting the sustainability of current production levels may be questioned.

India’s Export Surge Reshaping Market Dynamics

India has emerged as an unexpected game-changer in the global sugar market. The India Sugar Mill Association reported a dramatic 22% year-on-year surge in production from October through January to 15.9 MMT, and raised its full-year 2025-26 estimate to 31 MMT from 30 MMT previously. More significantly, India’s government approved exports of 1.5 MMT in the 2025-26 season after previously restricting shipments, creating a potential supply wave that’s pressuring sugar prices globally. This policy reversal stems from a domestic supply glut that policymakers are keen to alleviate. India’s status as the world’s second-largest producer makes its export policy a critical factor for international sugar price dynamics.

Global Surplus Forecasts Weigh on Market Sentiment

The supply-demand imbalance has prompted major forecasters to revise their surplus projections upward. The International Sugar Organization projected a 1.625 million MT surplus for 2025-26 following a deficit in the prior year, while trader Czarnikow boosted its surplus estimate to 8.7 MMT. The USDA’s December assessment was particularly comprehensive: global 2025-26 sugar production was forecast to climb 4.6% to a record 189.318 MMT, while consumption would rise only 1.4% to 177.921 MMT. This production-consumption gap underscores the structural pressure bearing down on sugar prices.

Thailand’s contribution to the oversupply cannot be overlooked. The Thai Sugar Millers Corp projected a 5% year-on-year increase to 10.5 MMT for 2025-26, reinforcing Thailand’s role as the second-largest exporter and amplifying the global availability picture.

Market Outlook: When Will Relief Emerge?

Despite the challenging near-term backdrop, some forecasters envision a tightening in future years. Covrig Analytics raised its 2025-26 global surplus to 4.7 MMT but projected the 2026-27 surplus would contract sharply to 1.4 MMT as weak sugar prices discourage further production expansion. This transition suggests that current pricing pressures, while significant, may be creating the conditions for eventual market rebalancing—though relief for sugar prices may not materialize until 2027 arrives.