Global Price of Sugar Sinks to Multi-Year Lows as Supply Overflows Markets

The price of sugar has plummeted to its lowest levels in over five years, extending a relentless five-month decline that shows no signs of abating. New York world sugar futures (SBH26) edged lower by 0.06 points (0.43%), while London ICE white sugar contracts (SWH26) dropped 8.20 points (2.12%) in recent trading. The bearish pressure reflects a fundamental market imbalance: global sugar supplies are expected to remain abundant for the foreseeable future.

Why Sugar Prices Keep Tumbling: The Oversupply Paradox

The core issue driving the price of sugar downward is straightforward—too much supply meeting modest demand. Recent forecasts from leading market analysts paint a consistent picture of surplus conditions stretching across multiple seasons. Czarnikow projects a worldwide surplus of 3.4 million metric tons (MMT) for the 2026/27 season, following an even larger 8.3 MMT surplus in 2025/26. Meanwhile, Green Pool Commodity Specialists forecasted a 2.74 MMT surplus for 2025/26, with a smaller 156,000 MT surplus expected in 2026/27. StoneX similarly anticipates a 2.9 MMT global surplus during 2025/26.

The International Sugar Organization (ISO) painted a slightly more optimistic picture but still showed significant surplus conditions. ISO projected a 1.625 million MT surplus for 2025/26, though notably lower than some private estimates. This surplus stems from a projected 3.2% year-over-year surge in global production to 181.8 million MT, while human consumption is expected to grow by only 1.4%.

Brazil’s Record Output Keeps Price of Sugar Under Pressure

Brazil, the world’s largest sugar producer, continues to amplify supply concerns with output reaching record levels. The Brazilian crop agency Conab increased its 2025/26 sugar production forecast to 45 MMT, with the USDA’s Foreign Agricultural Service estimating even higher at 44.7 MMT. This represents a 2.3% increase year-over-year and reflects favorable growing conditions across the Center-South region.

Through mid-January of the 2025/26 season, Brazil’s Center-South region had already produced 40.236 MMT of sugar, marking a 0.9% increase from the previous year at the same point. The proportion of sugarcane being processed for sugar rather than ethanol also increased to 50.78%, freeing up additional supplies for the market. However, looking further ahead, analysts expect this Brazilian surge to eventually moderate. Safras & Mercado predicted that 2026/27 production will decline by 3.91% to 41.8 MMT, with sugar exports falling 11% year-over-year to 30 MMT.

India’s Production Boom: Another Headwind for Price of Sugar

India’s dramatic production surge has added significant downward pressure on global sugar prices. The India Sugar Mill Association (ISMA) reported that India’s sugar output from October 1 to January 15 reached 15.9 MMT, up a remarkable 22% from the previous year. ISMA subsequently raised its full-season production estimate to 31 MMT—an 18.8% increase—driven by favorable weather and expanded cultivation acreage.

The USDA’s Foreign Agricultural Service projects India’s 2025/26 production will jump 25% to 35.25 MMT, making it a serious contender to Brazil’s market dominance. Compounding the supply pressure, India’s government has signaled its intention to approve additional sugar exports to address domestic oversupply. India previously announced that mills could export 1.5 MMT during the 2025/26 season, marking a reversal of the restrictive export quotas implemented in 2022/23 following weather-related production constraints.

Thailand and Other Producers Expand Supply

Thailand, the world’s third-largest sugar producer and second-largest exporter, is also boosting production. The Thai Sugar Millers Corp forecasted that the 2025/26 crop will grow 5% year-over-year to 10.5 MMT, with the USDA projecting a 2% increase to 10.25 MMT. This expansion, combined with rising output from Pakistan and other suppliers, further stretches global supplies.

Market Sentiment: Can Record Short Positions Spark a Reversal?

Despite the structural oversupply, there is one potential wildcard in the sugar market—record fund short positions. According to the latest Commitment of Traders (COT) report as of early February, funds increased their net short positions in NY world sugar futures and options by 57,104 contracts, reaching a record 239,232 net shorts since 2006. Such extreme positioning could potentially ignite a short-covering rally if market sentiment shifts, providing temporary relief for the beleaguered price of sugar.

Looking Ahead: When Will Price of Sugar Find Support?

The outlook for the immediate term remains bearish as surplus conditions are expected to persist. The USDA’s December report anticipated global sugar production for 2025/26 will reach a record 189.318 MMT, up 4.6% year-over-year, while ending stocks are expected to decline only modestly by 2.9% to 41.188 MMT.

However, a potential turning point may emerge in 2026/27. Czarnikow’s analysis suggests that lower prices will eventually discourage production expansion, allowing the global surplus to shrink to more sustainable levels. The firm expects the surplus to compress to 1.4 MMT in 2026/27, compared to 4.7 MMT estimated for the current season. As prices remain under pressure in the near term, market participants are watching for signs that production incentives may finally begin to ease the supply burden and stabilize the price of sugar heading into the next season.