Global Sugar Supplies Undercut Market Prices Amid Record Production Forecasts

Sugar markets are under intense pressure as abundant global production forecasts continue to undercut prices to multi-month and multi-year lows. March NY world sugar #11 (SBH26) declined 0.02 points (-0.14%) today, while March London ICE white sugar #5 (SWH26) fell 1.60 points (-0.39%), marking the extension of a week-long selloff that has pushed NY sugar to a 2.5-month low and London sugar to a 5-year low. The underlying problem is simple: analysts expect global sugar production to significantly outpace consumption through 2025/26, creating a surplus environment that continues to pressure valuations.

A Perfect Storm of Rising Production Across Multiple Continents

The scale of anticipated global sugar production increases is remarkable. The USDA’s Foreign Agricultural Service (FAS) projects that global 2025/26 sugar production will climb 4.6% year-over-year to a record 189.318 million MT, while human consumption is expected to grow just 1.4% to 177.921 million MT. This widening gap between production and consumption is the fundamental reason why sugar prices remain undercut by oversupply dynamics.

Multiple forecasting entities have revised their surplus estimates upward in recent months. Czarnikow, a major sugar trader, boosted its global 2025/26 sugar surplus projection to 8.7 million MT in November, up 1.2 million MT from its September forecast. The International Sugar Organization (ISO) forecasts a 1.625 million MT surplus in 2025-26, following a 2.916 million MT deficit the previous year. Even more bullish on supplies, Green Pool Commodity Specialists expects a 2.74 million MT global surplus for 2025/26, while StoneX anticipates a 2.9 million MT surplus for the same period. Covrig Analytics raised its estimate to 4.7 million MT in December, though it projects the surplus will moderate to 1.4 million MT in 2026/27 as weak prices discourage further production.

Brazil and India Drive Global Production Records

Brazil, the world’s largest sugar producer, is poised to deliver record crops that undercut pricing support. The Brazilian crop forecasting agency Conab raised its 2025/26 estimate to 45 million MT in November, up from 44.5 million MT previously. Unica reported in January that Brazil’s cumulative 2025-26 Center-South sugar output through December rose 0.9% year-over-year to 40.222 million MT, with the ratio of cane crushed for sugar increasing to 50.82% in 2025/26 from 48.16% in 2024/25. The USDA FAS predicts Brazilian output will reach a record 44.7 million MT in 2025/26, up 2.3% year-over-year.

However, consulting firm Safras & Mercado suggests some moderation ahead, forecasting that Brazil’s sugar production in 2026/27 will decline 3.91% to 41.8 million MT from the expected 43.5 million MT in 2025/26. This projected decrease would also reduce Brazilian exports to approximately 30 million MT in 2026/27, down 11% year-over-year.

India, the world’s second-largest sugar producer, is experiencing even more dramatic growth that has substantially undercut market sentiment. The India Sugar Mill Association (ISMA) reported in January that India’s 2025-26 sugar output from October 1 through January 15 reached 15.9 million MT, up 22% year-over-year. In November, the ISMA raised its full-year 2025/26 production estimate to 31 million MT, up 18.8% from its prior forecast of 30 million MT. The USDA FAS projects India’s 2025/26 production at an even higher 35.25 million MT, a 25% year-over-year increase driven by favorable monsoon rains and expanded sugar acreage.

A critical development supporting exports is the ISMA’s reduction of its estimate for sugar used in ethanol production to 3.4 million MT from a prior forecast of 5 million MT. This reallocation frees up additional sugar for export markets. Reflecting this surplus, India’s government has permitted mills to export 1.5 million MT of sugar in the 2025/26 season, a shift from the export quota system implemented in 2022/23 when late rains had constrained supplies.

Thailand and Broader Implications

Thailand, the world’s third-largest sugar producer and second-largest exporter, adds to the global oversupply picture. The Thai Sugar Millers Corp projected in October that Thailand’s 2025/26 sugar crop will increase 5% year-over-year to 10.5 million MT. The USDA FAS predicts a more modest 2% increase to 10.25 million MT for the same period. Combined with increased output from Pakistan and other suppliers, Thailand’s expansion continues to undercut rally attempts in global markets.

Market Implications and the Path Forward

The convergence of record or near-record production from the world’s leading sugar producers creates a structural headwind for prices. With global sugar ending stocks projected to total 41.188 million MT in 2025/26 (down just 2.9% year-over-year despite the production boom), inventory levels remain relatively comfortable from a supplier perspective. The market consensus from USDA, ISO, Green Pool, StoneX, Covrig, and other major analysts points to sustained price pressure as long as production forecasts remain elevated and export availabilities from India and other suppliers exceed traditional demand levels. Only a significant weather disruption to major growing regions or an unexpected demand surge would likely provide meaningful relief to sugar prices currently undercut by fundamental oversupply conditions.