Global Sugar Paste Market Pressured by Surging Production Forecasts

The refined sugar commodity complex faces mounting headwinds as March New York world sugar #11 futures (SBH26) declined -0.02 to -0.14% today, while March London ICE white sugar #5 (SWH26) slipped -1.60 points (-0.39%). This marks an extension of sustained downward pressure across sugar paste and bulk commodities, with New York contracts touching 2.5-month lows and London quotes sliding to five-year lows. The fundamental weakness stems from a consensus view among major forecasters that global sugar markets face substantial oversupply conditions throughout 2025/26 and into 2026/27, creating a challenging environment for both raw and refined sugar product lines including specialty sugar paste formulations.

India’s Output Surge Reshapes Export Dynamics

India’s sugar production trajectory has become a critical price driver, with the India Sugar Mill Association (ISMA) reporting on January 19 that cumulative output through mid-January reached 15.9 MMT, representing a +22% year-over-year surge. The dramatic production increase prompted ISMA to raise its full-season 2025/26 production forecast to 31 MMT in November—an upward revision of 1 MMT from the prior estimate—reflecting an +18.8% year-over-year expansion. This production windfall comes as ISMA simultaneously reduced its estimate for sugar diverted to ethanol production to 3.4 MMT from a July forecast of 5 MMT, potentially freeing significant volumes for export markets.

India’s policy stance has shifted materially toward export expansion. After implementing a stringent quota system in 2022/23 following production constraints, the Indian government signaled willingness to permit expanded shipments to manage domestic supply accumulation. India’s food ministry cleared mills to export 1.5 MMT during the 2025/26 season, with additional allocations potentially available subject to domestic supply conditions. As the world’s second-largest sugar producer, India’s export intentions carry outsized significance for global sugar paste and specialty refined sugar inventories.

Brazil Faces Production Uncertainty Beyond 2026

Brazil’s sugar production outlook presents a more nuanced picture. As of January 21, Unica reported that Center-South regional sugar output through December totaled 40.222 MMT, up +0.9% versus prior year, while the ratio of cane processed for sugar production rose to 50.82% in 2025/26 from 48.16% in 2024/25. Looking ahead, Conab (Brazil’s official crop forecasting agency) raised its 2025/26 production estimate to 45 MMT in early November, with the USDA Foreign Agricultural Service projecting an even higher 44.7 MMT—representing a +2.3% year-over-year gain to record levels.

However, production gains may prove ephemeral. Consulting firm Safras & Mercado forecast on December 23 that Brazil’s 2026/27 sugar output will contract by -3.91% to 41.8 MMT from the 43.5 MMT level expected in 2025/26. Export volumes face similar pressure, with Safras & Mercado projecting a -11% year-over-year decline in 2026/27 exports to 30 MMT. This production volatility creates uncertainty for participants in sugar paste manufacturing and distribution networks that depend on stable feedstock availability from Latin America’s primary supplier.

Global Surplus Estimates Trigger Fresh Bearish Pressure

The consensus among commodity forecasters has crystallized around substantial global oversupply. Green Pool Commodity Specialists projected a 2.74 MMT surplus for 2025/26 plus a 156,000 MT surplus for 2026/27. StoneX independently estimated a 2.9 MMT surplus for the 2025/26 season. More aggressively, sugar trader Czarnikow elevated its 2025/26 surplus estimate to 8.7 MMT in November, representing a +1.2 MMT revision from September’s projection of 7.5 MMT.

The International Sugar Organization (ISO) offered a moderating view on November 17, forecasting a 1.625 million MT surplus in 2025/26 following a 2.916 million MT deficit in 2024/25, driven principally by increased production in India, Thailand, and Pakistan. ISO’s projections embedded a +3.2% year-over-year increase in global production to 181.8 million MT. Covrig Analytics initially estimated a 4.1 MMT surplus in October before revising upward to 4.7 MMT in December, though the firm projects the 2026/27 surplus will normalize to 1.4 MMT as depressed price levels discourage production expansion.

The USDA’s December 16 report painted the most bullish supply picture, projecting 2025/26 global production at a record 189.318 MMT (+4.6% year-over-year) against consumption growth of just +1.4% to 177.921 MMT. Under this scenario, global ending stocks would decline -2.9% year-over-year to 41.188 MMT, suggesting the supply-demand balance may tighten modestly by season end despite near-term surplus conditions.

Refined Sugar Product Lines Face Margin Compression

Thailand, the world’s third-largest sugar producer and second-largest exporter, presents its own upside production risk. The Thai Sugar Millers Corp projected on October 1 that the 2025/26 crop will expand +5% year-over-year to 10.5 MMT, with the USDA estimating a more modest +2% gain to 10.25 MMT. Combined with Indian and Brazilian production gains, the global supply picture points toward sustained competitive pressure affecting the entire value chain from bulk commodity production through specialty segments like sugar paste formulations.

For refined sugar operations and specialty product manufacturers, the fundamental backdrop deteriorates as input costs face ongoing pressure from commodity oversupply. The breadth of surplus estimates—ranging from ISO’s relatively conservative 1.625 MMT projection to Czarnikow’s more aggressive 8.7 MMT forecast—underscores the market’s uncertainty around the magnitude of supply overhang, yet all major forecasters agree that downside price risk predominates across sugar paste and related refined products through at least mid-2026.