Global Sugar Market Faces Supply Surge as Brazil Production Outlook Shifts Lower for 2026/27

The global sugar landscape is undergoing significant recalibration as conflicting production signals emerge from major producing nations. While international forecasters predict record-breaking output levels, recent advisory data suggests Brazil—the world’s largest producer—may face headwinds in the upcoming cycle.

Brazil’s Production Trajectory: A Turning Point

Consulting firm Safras & Mercado delivered a notable downward revision to Brazil’s sugar production prospects for 2026/27, projecting output will decline by 3.91% to 41.8 MMT, down from the 43.5 MMT anticipated for 2025/26. This contraction scenario also extends to export volumes, with the firm forecasting a steeper 11% year-over-year drop in Brazil sugar exports to approximately 30 MMT in 2026/27. These projections provide near-term support for sugar valuations, offering a counterbalance to longer-term supply concerns.

For the current 2025/26 season, Brazil continues to demonstrate robust production capacity. Conab, Brazil’s official crop forecasting agency, elevated its 2025/26 estimate to 45 MMT in November, up from 44.5 MMT projected earlier. Brazil’s Center-South region, the nation’s production heartland, reported cumulative output through November at 39.904 MMT—a 1.1% year-over-year increase. Notably, the proportion of sugarcane allocated for sugar production has risen to 51.12% in 2025/26, compared to 48.34% in the prior year, reflecting strategic prioritization of sugar output over ethanol.

Global Oversupply Dynamics Intensify

The international market faces mounting pressure from a broader production surplus. The International Sugar Organization projected a 1.625 million MT surplus for 2025-26, a sharp reversal from the 2.916 million MT deficit recorded in 2024-25. This surplus trajectory is being fueled by expanded capacity across multiple regions: India, Thailand, and Pakistan are all ramping up production. Globally, the ISO forecasts a 3.2% year-over-year surge in sugar production to 181.8 million MT for 2025-26.

Sugar trader Czarnikow provided an even more bearish assessment, raising its global 2025/26 surplus projection to 8.7 MMT in early November, representing a 1.2 MMT upward revision from September’s 7.5 MMT estimate.

India and Thailand: Supply Expansion Pressures Prices

India’s output trajectory presents a particularly acute supply challenge. The India Sugar Mill Association raised its 2025/26 production forecast to 31 MMT in November, up from an earlier 30 MMT projection, representing an 18.8% year-over-year increase. This expansion is being partially offset by a reduction in ethanol feedstock demand—ISMA cut its estimate for sugar destined for ethanol production to 3.4 MMT from a previously anticipated 5 MMT. The resultant surplus capacity is enabling India’s government to consider additional export quotas beyond the currently permitted 1.5 MMT allocation for the 2025/26 season.

Early-season production data underscores this upward momentum: India’s sugar output from October 1 through mid-December jumped 28% year-over-year to 7.83 MMT. As the world’s second-largest producer, India’s export availability is creating meaningful downward price pressure.

Thailand, the world’s third-largest producer and second-largest exporter, is similarly boosting output. The Thai Sugar Millers Corp projected a 5% year-over-year increase in the 2025/26 crop to 10.5 MMT, adding to global supply headwinds.

USDA’s Bullish Supply Projections

The U.S. Department of Agriculture’s December report painted an expansive picture of the 2025/26 global sugar landscape. USDA projects world sugar production will climb 4.6% year-over-year to reach a record 189.318 MMT, while human consumption is estimated to rise just 1.4% year-over-year to 177.921 MMT. This production-consumption gap is expected to compress global ending stocks by 2.9% year-over-year to 41.188 MMT.

USDA’s Foreign Agricultural Service specifically forecasted Brazil’s 2025/26 output at a record 44.7 MMT (a 2.3% year-over-year increase), India’s production at 35.25 MMT (reflecting a 25% year-over-year surge driven by favorable rainfall and expanded planting), and Thailand’s output at 10.25 MMT (a 2% year-over-year gain).

Price Action and Market Sentiment

March NY world sugar #11 futures closed Monday up 0.09 points (+0.59%), settling near last Wednesday’s 2.25-month high. In contrast, March London ICE white sugar #5 declined 0.60 points (-0.14%), reflecting the mixed signals pervading the market. The near-term support from expectations of declining Brazil production in 2026/27 is being weighed against longer-term pressures from anticipated global oversupply and record production forecasts.

The dichotomy in market positioning reflects the tension between immediate supply concerns in Brazil and the structural surplus conditions that are expected to dominate the broader 2025/26 cycle. Market participants continue to monitor production updates, export policy announcements, and consumption trends across major producing and consuming nations as they reassess sugar market dynamics.