Global Sugar Surplus Continues to Weigh on Sugar Price Momentum

Sugar markets face persistent pressure from anticipated global oversupply, with key futures contracts retreating to multi-month and multi-year lows. March NY sugar futures have dropped to their lowest level in 2.5 months, while London ICE white sugar has fallen to a 5-year low, signaling sustained bearish sentiment across the sector. The fundamental driver of this weakness is straightforward: multiple forecasters expect historically significant supply surpluses through the 2026-27 season, pressuring valuations across all major sugar-producing regions.

The gap between anticipated production and consumption remains the central issue depressing sugar price trends. The International Sugar Organization (ISO) forecasted in November that global sugar production would climb 3.2% year-over-year to 181.8 million MT during 2025-26, with a projected 1.625 million MT surplus. The USDA’s December report painted an even more pronounced picture, projecting global production to surge 4.6% to a record 189.318 million MT against consumption of 177.921 million MT. Surplus estimates from various trading houses have proven even more dramatic—Czarnikow boosted its 2025/26 global surplus forecast to 8.7 MMT, while Green Pool Commodity Specialists and StoneX projected 2.74 MMT and 2.9 MMT surpluses respectively.

Brazil’s Record Output Dominates Global Production Dynamics

Brazil, the world’s largest sugar producer, remains the epicenter of the supply expansion story pressuring sugar prices globally. Brazil’s cumulative 2025-26 Center-South production through December reached 40.222 MMT, representing a 0.9% year-over-year increase, with sugar cane crush ratios rising to 50.82% in 2025/26 from 48.16% in the prior season. Looking ahead, Conab raised its full-season Brazil production estimate to 45 MMT for 2025/26, the highest on record. The USDA’s Foreign Agricultural Service projected Brazil 2025/26 production at 44.7 MMT, up 2.3% year-over-year. These production levels have become a critical headwind for sugar price recovery.

However, a potential silver lining exists for sugar price stabilization. Consulting firm Safras & Mercado indicated that Brazil’s 2026/27 production would decline 3.91% to 41.8 MMT from the expected 43.5 MMT in 2025/26, with sugar exports forecast to fall 11% to 30 MMT. This projected pullback suggests sugar price pressures may eventually moderate once current surplus supplies clear.

India’s Production Surge and Export Permission Add Supply Pressure

India’s accelerating production has become another major factor constraining sugar price sentiment. The India Sugar Mill Association (ISMA) reported that India’s 2025-26 season output through January 15 surged 22% year-over-year to 15.9 MMT. ISMA raised its full-season 2025/26 India production estimate to 31 MMT in November, up 18.8% year-over-year. The USDA’s Foreign Agricultural Service projected even higher 2025/26 output of 35.25 MMT, driven by favorable monsoon conditions and expanded planting.

The permission for increased exports has amplified the bearish impact on sugar prices. India’s food ministry authorized mills to export 1.5 MMT during the 2025/26 season to manage domestic supply gluts, with the food secretary suggesting potential for additional shipments. As the world’s second-largest sugar producer, India’s entry into export expansion represents a significant headwind for global sugar price recovery. ISMA also reduced its estimate of sugar devoted to ethanol production to 3.4 MMT from 5 MMT previously, freeing additional tonnage for export markets and further pressuring prices.

Thailand and Pakistan Drive Additional Supply Growth

Thailand, the world’s third-largest sugar producer and second-largest exporter, contributes to the global surplus dynamic. The Thai Sugar Millers Corp projected 2025/26 production at 10.5 MMT, up 5% year-over-year, with the USDA forecasting a more modest 2% increase to 10.25 MMT. The ISO highlighted that Pakistan is also contributing to the surplus picture, alongside production increases from Thailand and India.

Market Outlook: When Pressures on Sugar Prices May Ease

The bearish supply outlook has compressed sugar price levels considerably. Covrig Analytics raised its 2025/26 global sugar surplus estimate to 4.7 MMT in December, though it projects the surplus would narrow to 1.4 MMT in 2026/27 as weak valuations discourage production expansion. This projected contraction in supply growth could eventually provide support for sugar price recovery, though relief appears unlikely until current surpluses work through the market.

The fundamental conflict remains stark: record global production exceeding consumption by historically wide margins continues to depress sugar price trends, with near-term relief contingent on either demand acceleration or production discipline that forecasters do not yet anticipate.