Global Sugar Supplies Undercut Market Prices Amid Record Production Forecasts

Sugar futures market hit significant lows this week, with New York world sugar #11 futures falling to a 2.5-month low and London ICE white sugar #5 contracts dropping to a 5-year low. The selloff reflects mounting concerns about ample global supplies that are projected to undercut prices throughout the coming production cycle. Multiple commodity specialists warn that massive supply surpluses are set to dominate market dynamics, creating significant headwinds for price recovery.

Sugar Futures Face Downward Pressure from Global Surplus Expectations

The immediate price weakness stems from converging supply pressures that undercut market sentiment. A raft of recent forecasts from leading commodity research firms paint a concerning picture for price support. Green Pool Commodity Specialists projects a 2.74 million metric ton (MMT) global sugar surplus for 2025/26, followed by a smaller 156,000 MT surplus in 2026/27. StoneX, another major commodity broker, raised its 2025/26 surplus forecast to 2.9 MMT, while the more bullish Covrig Analytics initially estimated 4.1 MMT before revising upward to 4.7 MMT in December. Sugar trader Czarnikow took an even more bearish stance, forecasting an 8.7 MMT surplus for 2025/26.

These divergent forecasts, ranging from 2.74 MMT to 8.7 MMT, underscore the magnitude of supply pressures undercut the current price levels. Even the most conservative estimates signal significant oversupply conditions that will weigh on values. The International Sugar Organization (ISO) projects global production will jump 3.2% year-over-year to 181.8 million MT in 2025-26, while consumption is expected to rise just 1.4%, widening the supply-demand gap and reinforcing downward price momentum.

Major Producers Ramp Up Output: Brazil, India, and Thailand Lead Supply Growth

Brazil, the world’s largest sugar producer, continues to boost output aggressively. Conab, Brazil’s official crop forecasting agency, raised its 2025/26 production estimate to 45 MMT in November, up from an earlier forecast of 44.5 MMT. The Center-South region, accounting for the bulk of Brazilian sugar production, showed 40.222 MMT of output through December 2025, up 0.9% year-over-year. Additionally, the ratio of sugarcane crushed for sugar production increased to 50.82% in 2025/26 from 48.16% in 2024/25, indicating mills are prioritizing sugar over competing products like ethanol.

India’s production surge presents another supply headwind. The India Sugar Mill Association (ISMA) reported that cumulative sugar output from October 1 through January 15 reached 15.9 MMT, up 22% year-over-year. ISMA raised its full-season 2025/26 production forecast to 31 MMT in November, representing an 18.8% year-over-year increase. Notably, ISMA cut its estimate for sugar diverted to ethanol production from 5 MMT to 3.4 MMT, freeing up additional volumes for domestic and export markets.

India’s expanding export appetite also undercuts prices. The Indian government is permitting additional sugar exports to relieve domestic supply glut, having authorized 1.5 MMT of exports in the 2025/26 season. This reverses the country’s previous policy stance—India had implemented a quota system for sugar exports starting in 2022/23 after late rains constrained production. The lifting of export restrictions threatens to redirect substantial volumes into global markets, further pressuring prices.

Thailand, the world’s third-largest producer and second-largest exporter, is also expanding output. The Thai Sugar Millers Corp projected a 5% year-over-year increase in the 2025/26 crop to 10.5 MMT, adding to the global supply buildup that undercuts market valuations.

USDA Forecasts Record Global Production, Stoking Supply Concerns

The U.S. Department of Agriculture (USDA) delivered perhaps the most sobering assessment in its December 16 report. USDA projects global 2025/26 sugar production will climb 4.6% year-over-year to a record 189.318 MMT while human consumption rises only 1.4% to 177.921 MMT. This implies a structural surplus that continues to undercut price support mechanisms.

USDA’s Foreign Agricultural Service (FAS) specifically forecasts Brazil’s 2025/26 production rising 2.3% to a record 44.7 MMT, India’s output surging 25% to 35.25 MMT driven by favorable monsoon rains and expanded acreage, and Thailand’s crop increasing 2% to 10.25 MMT. Global ending stocks are expected to fall 2.9% to 41.188 MMT, still providing ample carryover supply to restrain price recovery.

Limited Support Factors Signal Longer-Term Price Pressure

The sole bright spot for prices involves production expectations beyond 2025/26. Consulting firm Safras & Mercado forecasts Brazil’s 2026/27 production will decline 3.91% to 41.8 MMT from an expected 43.5 MMT in the current season. Brazil’s sugar exports are projected to fall 11% year-over-year to 30 MMT in 2026/27. Covrig Analytics similarly expects the 2026/27 global surplus to shrink to 1.4 MMT from 4.7 MMT in 2025/26, as weak prices discourage planting and expansion.

However, these forward-looking supports appear insufficient to offset the immediate supply avalanche. The consensus from multiple forecasting firms points to persistent surplus conditions that will undercut attempts at price recovery throughout the 2025/26 season, leaving traders and consumers with a bearish bias until supply dynamics shift materially.