Global Sugar Prices Undercut by India's Record Production Surge

Sugar futures are sliding amid a supply surplus landscape that threatens to keep prices undercut for the foreseeable future. As of mid-February 2026, NY World Sugar #11 (SBH26) declined 0.02 cents (-0.14%), while London ICE White Sugar #5 (SWK26) fell 0.90 cents (-0.22%). The primary culprit is India, the world’s second-largest sugar producer, which is flooding the market with record output that undercuts global price levels.

Indian Output Surges to Undercut Global Markets

The Indian Sugar and Bio-energy Manufacturers Association (ISMA) has projected India’s 2025/26 sugar production at 29.3 million metric tons (MMT), representing a 12% year-over-year increase. This acceleration is being fueled by favorable monsoon conditions and expanded sugar acreage across the subcontinent. The USDA’s Foreign Agricultural Service painted an even more aggressive picture, forecasting India’s 2025/26 output at 35.25 MMT—a 25% jump from the prior year.

Production momentum has been building throughout the 2025/26 season. Through January 15, ISMA reported that India’s cumulative sugar output reached 15.9 MMT, up 22% year-over-year. More significantly, New Delhi’s government approved an additional 500,000 MT of sugar for export in February 2026, layered on top of the 1.5 MMT export quota approved in November 2025. This policy shift marks a departure from India’s 2022/23 quota system, originally imposed after late monsoon rains had constrained production and domestic supplies. The expansion undercuts price prospects as Indian sugar enters global markets in greater volumes.

Supporting the export surge, ISMA also revised downward its estimate for sugar dedicated to ethanol production in India, cutting the forecast to 3.4 MMT from a July projection of 5 MMT. This reduction frees up additional supplies for export, further undercut ting the economics for global producers outside the subcontinent.

Brazil and Thailand Keep Prices from Collapsing

While India’s production surge creates headwinds, Brazil’s currency strength and production dynamics offer some price support. The Brazilian real rallied to a 1.75-year high against the dollar in mid-February, discouraging sugar exports from Brazil’s major producers and temporarily stabilizing prices. However, the currency advantage may be fleeting.

Brazil’s near-term output picture shows mixed signals. Unica reported that Center-South sugar production in the second half of January fell 36% year-over-year to just 5,000 MT. Yet cumulative 2025-26 Center-South output through January stood at 40.24 MMT, up 0.9% year-over-year. More bullishly, the ratio of cane crushed for sugar rose to 50.74% in 2025/26 from 48.14% in 2024/25, signaling increased sugar production focus.

Longer-term, the USDA projects Brazil’s 2025/26 sugar production will climb 2.3% to a record 44.7 MMT. However, consulting firm Safras & Mercado warned that Brazil’s 2026/27 production may decline 3.91% to 41.8 MMT from the expected 43.5 MMT in 2025/26, with exports falling 11% to 30 MMT.

Thailand, the world’s third-largest sugar producer and second-largest exporter, offers moderate support. The Thai Sugar Millers Corp projected Thailand’s 2025/26 crop will increase 5% to 10.5 MMT, while the USDA estimates 2.3% growth to 10.25 MMT. These increases, though meaningful for Thailand, pale in comparison to India’s production surge and do little to offset the global surplus being built by increased Indian supplies.

Global Surplus Outlook Weighs on Market Sentiment

Multiple forecasters are bracing for persistent global sugar surpluses that keep prices undercut. The International Sugar Organization (ISO) projected a 1.625 MMT surplus for 2025-26 following a 2.916 MMT deficit in 2024-25. ISO attributed the turnaround to increased production in India, Thailand, and Pakistan, coupled with a projected 3.2% rise in global production to 181.8 MMT in 2025-26.

The USDA’s December 2025 bi-annual report offered the most expansive outlook. The agency forecast global 2025/26 sugar production at a record 189.318 MMT, up 4.6% year-over-year, while global human consumption was expected to increase just 1.4% to 177.921 MMT. Crucially, the USDA projected global sugar ending stocks would fall only 2.9% year-over-year to 41.188 MMT—a modest decline suggesting ample supplies will remain undercut prices.

Sugar trader Czarnikow has grown increasingly bearish, lifting its global 2025/26 surplus estimate to 8.7 MMT in November (up 1.2 MMT from a September estimate of 7.5 MMT). The firm also expects a 3.4 MMT surplus in 2026/27. Competitors Green Pool Commodity Specialists and StoneX offered forecasts of 2.74 MMT and 2.9 MMT surpluses respectively for 2025/26, indicating broad consensus that the surplus environment will persist and undercut market prices.

Fund Positioning Adds Volatility to Sugar Futures

Behind the scenes, fund positioning is creating technical pressure that amplifies price declines. The Commitment of Traders (COT) report for the week ended February 17 revealed that funds had boosted their net short position in NY sugar futures and options to a record 265,341—the highest level since data collection began in 2006. This excessively short positioning creates a hair-trigger environment for sharp rallies if sentiment shifts, but for now, heavy short exposure reinforces the bearish bias.

The market’s pessimism was crystallized on February 12 when sugar prices plunged to 5.25-year lows on concerns that a global surplus will persist. The combination of record Indian production, ample global supplies, and concentrated fund short positioning creates a perfect storm that has undercut the entire sugar complex.

Path Forward: When Will Prices Stabilize?

The fundamental outlook suggests sugar prices will remain undercut by oversupply dynamics. With India ramping exports, global production climbing to record levels, and surpluses expected to persist through 2027, the structural headwind facing prices appears intact. Unless demand accelerates sharply or a major producing region experiences a significant crop shock, the undercut environment looks poised to continue through at least mid-2026 and into 2027.