Abundant Global Sugar Supplies Continue Pressuring Prices Lower

Sugar prices remain subdued across major trading hubs, with March NY world sugar #11 (SBH26) trading up +0.07 points (+0.48%) while March London ICE white sugar #5 (SWH26) slipped -4.00 points (-0.95%). The contradiction between these two markets underscores a broader reality: abundant sugar supplies worldwide are the dominant force keeping prices under sustained pressure, overwhelming other market influences like currency fluctuations.

The fundamental issue is straightforward—the world is producing far more sugar than it can readily consume. Global sugar production estimates for the 2025/26 season point to record or near-record output, while demand growth remains modest. This imbalance creates a structural headwind for prices that will likely persist throughout the season.

Brazil and India Driving Production Surge

The two largest sugar producers are both ramping up output, amplifying the abundant supply situation. Brazil’s cumulative 2025-26 Center-South sugar production through December reached 40.222 MMT, representing a +0.9% year-over-year increase. More significantly, Brazilian mills shifted more sugarcane toward sugar rather than ethanol production, with the cane-crushing ratio for sugar climbing to 50.82% in the 2025/26 season from 48.16% the prior year. Brazil’s crop forecasting agency raised its full-year production estimate to 45 MMT, signaling that record output is on track.

India presents an even more dramatic supply expansion. The India Sugar Mill Association reported that India’s sugar output in the first quarter (Oct 1-Jan 15) of the 2025/26 season surged +22% year-over-year to 15.9 MMT. The ISMA subsequently raised its full-year production forecast to 31 MMT from 30 MMT, reflecting a +18.8% year-over-year increase driven by favorable monsoon rains and expanded planted acreage. Crucially, India reduced its estimate for sugar allocated to ethanol production to 3.4 MMT from 5 MMT, freeing up additional supply for export markets.

Thailand, the world’s third-largest producer, is also contributing to the abundant supply picture. The Thai Sugar Millers Corp projected that Thailand’s 2025/26 crop would increase +5% year-over-year to 10.5 MMT, maintaining its position as the world’s second-largest exporter.

Export Surge Intensifying Global Oversupply

The abundant sugar supplies are translating into expanded export flows, particularly from India. After India’s food ministry indicated it would permit additional sugar exports to relieve domestic supply glut, mills received approval to export 1.5 MMT during the 2025/26 season. This represents a significant policy shift from India’s quota system introduced in 2022/23. The prospect of higher Indian exports is putting additional downward pressure on global prices.

Global Surplus Expected to Persist

Multiple forecasting agencies have raised their surplus estimates for the 2025/26 season, painting a picture of abundant supplies extending well into next year. The International Sugar Organization forecast a 1.625 million MT surplus for 2025-26, reversing a 2.916 million MT deficit from the prior year. ISO cited increased production from India, Thailand, and Pakistan as the primary drivers.

More dramatically, Covrig Analytics raised its global surplus estimate to 4.7 MMT, while sugar trader Czarnikow boosted its forecast to 8.7 MMT. These varying estimates reflect uncertainty around global demand, but all point in the same direction: oversupply remains the market’s fundamental condition.

The USDA, in its December report, projected global production would climb +4.6% year-over-year to a record 189.318 MMT, while global consumption would increase only +1.4% to 177.921 MMT. This 11-point divergence in growth rates illustrates why abundant supplies will keep prices pressured: production growth far outpaces demand expansion.

Limited Relief Expected Near-Term

While some forecasters project that 2026/27 global sugar surplus will narrow to 1.4 MMT as weak prices eventually discourage production, the near-term market reality remains one of abundant supply and constrained demand. Brazil’s production is expected to fall slightly in 2026/27 to 41.8 MMT, with exports declining -11% year-over-year to 30 MMT, but this represents only marginal relief compared to current oversupply conditions.

The convergence of record production, expanded export flows, and elevated global inventory levels has created an environment where sugar prices will struggle to find meaningful support. Until production growth moderates or demand accelerates substantially, abundant supplies will remain the dominant factor keeping prices subdued across both New York and London trading venues.