Record Global Sugar Output Undercuts Prices Amid Worldwide Production Surge

The global sugar market is under significant downward pressure as production forecasts continue to climb. Sugar futures markets reflected this weakness recently, with March New York world sugar #11 trading down 0.15 points (-1.01%), while March London ICE white sugar #5 declined 3.70 points (-0.90%). This price pressure undercuts earlier market expectations, as London sugar has slipped to a 2.5-month low. The primary driver behind this bearish sentiment is straightforward: worldwide sugar production is expanding at a pace that far outstrips global demand, creating a structural oversupply dynamic that weighs heavily on price discovery.

Brazil’s Production Expansion Reaches Record Levels

Brazil, the world’s largest sugar producer, continues to expand its output capacity significantly. According to Unica’s report from early in the analysis period, cumulative sugar production in Brazil’s Center-South region for the 2025-26 cycle reached 40.222 million metric tons (MMT), representing a 0.9% year-over-year increase. More notably, sugar processors in Brazil increased their allocation of crushed cane for sugar production to 50.82% in the 2025-26 season, up from 48.16% in the prior year—a meaningful shift that signals intensified sugar focus. These adjustments undercut previous assumptions about regional production constraints. Looking ahead, Brazil’s official forecasting agency Conab raised its 2025-26 sugar production estimate to 45 MMT in early November, up from a prior forecast of 44.5 MMT, setting the stage for record output. However, a future supply decline appears probable: consulting firm Safras & Mercado projected in late December that Brazil’s sugar production in 2026-27 will fall 3.91% to 41.8 MMT, with exports declining 11% to 30 MMT. This temporary pullback suggests the current production surge may be self-limiting as lower prices discourage investment.

India Ramps Up Sugar Output and Export Potential

India, the world’s second-largest sugar producer, is experiencing explosive production growth that is beginning to reshape global trade dynamics. According to the India Sugar Mill Association (ISMA), output from October 1 through mid-January reached 15.9 MMT, up 22% year-over-year. The organization raised its full-season 2025-26 production estimate to 31 MMT in mid-November, representing an 18.8% year-over-year gain compared to its earlier forecast of 30 MMT. This upgraded outlook reflects favorable monsoon rainfall and expanded sugar acreage across Indian growing regions.

The market implications are substantial because India is positioned to dramatically increase its export activity. Government authorities signaled in November that mills would be permitted to export 1.5 MMT in the 2025-26 season—a meaningful volume that undercuts the domestic supply constraints that previously limited India’s international presence. India’s food secretary indicated potential for even greater export allowances to alleviate domestic supply abundance. This export expansion directly pressures the global market, as these additional volumes entering international channels compete with exports from other producers and ultimately undercut pricing power for all market participants.

Thailand and Global Surplus Pressure Market Prices

Thailand, the world’s third-largest sugar producer and second-largest exporter, is also contributing to the production momentum. The Thai Sugar Millers Corp projected in early October that the 2025-26 sugar crop will expand 5% year-over-year to 10.5 MMT, maintaining Thailand’s important role in global supply.

The International Sugar Organization (ISO) reported in mid-November that it was forecasting a 1.625 million MT sugar surplus for 2025-26, following a 2.916 million MT deficit in the prior year—a remarkable swing from shortage to abundance. ISO attributed this shift primarily to increased production across India, Thailand, and Pakistan. The organization also raised its global production growth forecast to 3.2% year-over-year, with total production reaching 181.8 million MT. Meanwhile, sugar trader Czarnikow offered an even more pessimistic outlook, boosting its global 2025-26 surplus estimate to 8.7 MMT in early November, up 1.2 MMT from a September forecast of 7.5 MMT.

Covrig Analytics quantified the surplus problem in late December when it raised its 2025-26 global surplus estimate to 4.7 MMT from 4.1 MMT projected in October. Yet Covrig’s forward analysis suggests some market relief may eventually arrive: the firm projects that the 2026-27 global sugar surplus will narrow to 1.4 MMT as weak prices begin discouraging production decisions. This potential supply contraction later offers some hope to current market bears.

Major Forecasters Project Record 2025-26 Production Surge

The United States Department of Agriculture (USDA) released its comprehensive December bi-annual projection, projecting that global 2025-26 sugar production will reach a record 189.318 MMT, representing a 4.6% year-over-year increase. The agency simultaneously forecasted that global human sugar consumption would climb 1.4% year-over-year to 177.921 MMT—meaningful growth, but substantially slower than production gains. This supply-demand imbalance directly undercuts market optimism, as the production growth rate more than triples consumption growth.

The USDA’s Foreign Agricultural Service (FAS) provided region-specific forecasts that reinforce the production surge narrative. Brazil’s 2025-26 sugar production was projected to reach a record 44.7 MMT, representing a 2.3% year-over-year gain. India’s output was forecast to climb 25% year-over-year to 35.25 MMT, driven by favorable weather patterns and expanded cultivation. Thailand’s production was estimated at 10.25 MMT, up 2% year-over-year. Collectively, these forecasts demonstrate that production momentum spans the major producing regions, creating a truly global oversupply condition that will continue to undercut prices throughout the 2025-26 cycle and potentially into the following period.