Global Sugar Surplus Undercuts Prices Amid Record Production Surge

Sugar markets are experiencing significant downward pressure as record global production outpaces demand. March NY world sugar #11 (SBH26) declined by 0.02 points (-0.14%) on the session, while March London ICE white sugar #5 (SWH26) fell 1.60 points (-0.39%). These losses extend a week-long slide, with NY sugar sliding to a 2.5-month low and London prices tumbling to a 5-year low. The unprecedented undersupply concerns are being replaced by oversupply realities, and this fundamental shift continues to undercut market sentiment across major trading hubs.

India and Brazil Lift Output Growth, Undercutting Market Stability

India has emerged as a major driver of global production increases. The India Sugar Mill Association (ISMA) reported in January 2026 that India’s sugar output from October 1 through mid-January reached 15.9 million metric tons (MMT), up 22% year-over-year. Looking at the full 2025/26 season, ISMA elevated its production forecast to 31 MMT from a previous estimate of 30 MMT—a jump of 18.8% year-over-year. Crucially, ISMA also reduced its estimate for domestic ethanol consumption from 5 MMT to 3.4 MMT, freeing up additional sugar for export markets.

Brazil, as the world’s largest sugar producer, is also ramping up output. Brazil’s cumulative Center-South sugar production through December 2025 climbed 0.9% to 40.222 MMT, with the crush ratio for sugar rising to 50.82% in the 2025/26 season from 48.16% the prior year. Conab, Brazil’s official crop forecasting agency, boosted its 2025/26 production forecast to 45 MMT in November 2025, up from an earlier projection of 44.5 MMT. This production surge contrasts sharply with more modest consumption growth, leaving global markets in a structural deficit.

Thailand, the world’s third-largest producer and second-largest exporter, is also contributing to the supply pressure. The Thai Sugar Millers Corporation projected in October 2025 that Thailand’s 2025/26 crop would expand 5% year-over-year to 10.5 MMT, adding further volume to competitive export markets.

Export Policies and Quota Adjustments Amplify Supply Pressure

India’s decision to increase sugar exports has further suppressed global prices. After introducing a quota system in 2022/23 to protect domestic supplies, India’s food ministry announced in November 2025 that it would permit mills to export 1.5 MMT during 2025/26. Government officials have signaled potential for even larger export allocations, which would help clear India’s domestic surplus but simultaneously undercut prices globally. As the world’s second-largest sugar producer, India’s export pivot carries outsized weight in international markets.

Brazil’s export trajectory is similarly elevated. Multiple forecasting firms have projected robust 2025/26 exports, though consulting firm Safras & Mercado suggested a reversal ahead. The firm forecast that Brazil’s 2026/27 production would decline 3.91% to 41.8 MMT, with exports falling 11% year-over-year to 30 MMT—suggesting production peaks may create only temporary reprieve from current oversupply conditions.

Multiple Institutions Converge on Surplus Forecasts

The depth of the surplus remains a point of debate among commodity analysts, but all major forecasters agree that oversupply conditions persist. Green Pool Commodity Specialists projected a 2.74 MMT global surplus for 2025/26 and a smaller 156,000 MT surplus for 2026/27. StoneX offered a slightly larger surplus estimate of 2.9 MMT for 2025/26. Covrig Analytics initially estimated a 4.1 MMT surplus in October but raised its forecast to 4.7 MMT by December—indicating worsening conditions. At the extreme, sugar trader Czarnikow projected an 8.7 MMT surplus, up from a September estimate of 7.5 MMT.

The International Sugar Organization (ISO) took a more moderate stance, forecasting a 1.625 million MT surplus for 2025/26 following a 2.916 million MT deficit in 2024/25. However, ISO noted that this surplus is being driven by increased production in India, Thailand, and Pakistan. ISO projected a 3.2% year-over-year rise in global sugar production to 181.8 million MT for 2025/26, significantly outpacing the expected 1.4% increase in human consumption.

USDA’s December Report Signals Structural Oversupply

The U.S. Department of Agriculture’s bi-annual report released December 16, 2025, painted a picture of prolonged surplus conditions. The USDA projected that global 2025/26 sugar production would climb 4.6% year-over-year to a record 189.318 MMT, while global consumption would increase at a much slower 1.4% pace to reach 177.921 MMT. The resulting production-to-consumption gap essentially ensures continued downward price pressure throughout the marketing year.

The USDA’s Foreign Agricultural Service provided granular forecasts by country. Brazil’s 2025/26 production was projected to reach a record 44.7 MMT, a 2.3% increase from 2024/25. India’s forecast was more aggressive: the FAS estimated 2025/26 output at 35.25 MMT, reflecting a 25% year-over-year surge driven by favorable monsoon rains and expanded sugar acreage. Thailand’s production was forecast to reach 10.25 MMT, a 2% increase. Global ending stocks were projected to fall just 2.9% year-over-year to 41.188 MMT—a modest drawdown that would fail to meaningfully balance the market.

Looking Ahead: When Will Supply Pressures Ease?

While current conditions remain firmly bearish, some forecasters see potential relief emerging. Covrig Analytics projects that the 2026/27 global surplus will compress dramatically to just 1.4 MMT as lower prices discourage production and consumption gradually rises. Safras & Mercado’s forecast of declining Brazilian output in 2026/27 suggests that record production in the current cycle may represent a cyclical peak rather than a structural shift.

For now, however, prices remain undercutting long-term averages, with both NY and London contracts testing multi-month and multi-year lows respectively. Traders and producers worldwide are adjusting to a market where production has swung from undersupply to considerable surplus—a structural reversal that will likely persist until global capacity constraints or demand recovery reasserts balance. The sugar market’s current trajectory demonstrates how swiftly commodity fundamentals can shift when multiple producing regions achieve simultaneously strong crops, all reaching export markets within the same season.