Global Sugar Production Surge Exerts Downward Pressure on Sugar Prices

Sugar prices faced fresh headwinds as major producing nations reported higher-than-expected output for the 2025-26 season. The bearish narrative centers on a confluence of factors: expanding production capacity in Brazil, India’s aggressive export expansion, and Thailand’s rising output all converging to create a structural oversupply situation in global markets. This multidimensional supply surge fundamentally challenges the price discovery mechanism for sugar across major trading venues.

Brazil’s Record Output Drives Bears Forward

Brazil, the world’s dominant sugar producer, continues to amplify production. Recent data from Conab, the Brazilian government’s crop forecasting agency, estimates that sugar output will reach 44.7 MMT in the 2025-26 season. This trajectory represents a 2.3% year-over-year increase and marks an all-time production record. Critically, Brazilian mills have recalibrated their crushing priorities: the cane-crushing ratio dedicated to sugar production rose to 50.82% in the current season, up from 48.16% in the prior year. This strategic shift—favoring sugar over ethanol—amplifies market supplies precisely when global inventory levels are already strained. The USDA Foreign Agricultural Service independently validates this trend, projecting Brazilian sugar production at comparable levels to 45 MMT.

India’s Export Pivot Reshapes Sugar Prices Dynamics

India’s sugar trajectory introduces a second supply vector pressuring sugar prices. The India Sugar Mill Association (ISMA) reported that production during October-January of the current season climbed 22% year-over-year to 15.9 MMT, positioning the nation toward a total seasonal output of approximately 31-35 MMT—substantially above prior-year volumes. The USDA forecasts India’s full-season production at 35.25 MMT, representing a 25% expansion driven by favorable monsoon conditions and expanded planting acreage.

More consequentially for global sugar prices, policy shifts are accelerating Indian export flows. The government recently signaled permission for mills to export an additional 1.5 MMT during 2025-26, lifting earlier restrictions that were implemented in 2022 when monsoon failures had constrained domestic supplies. Removing these export barriers means India—the world’s second-largest producer—can now channel surplus production into international markets, directly competing with other exporters and amplifying downward pressure on sugar prices globally.

Thailand’s Supply Contribution and Market Implications

Thailand, the world’s third-largest sugar producer and second-largest exporter, adds another dimension to the supply expansion narrative. The Thai Sugar Millers Association projects the 2025-26 crop will increase 5% year-over-year to 10.5 MMT. While numerically smaller than Brazil or India, Thailand’s export orientation means virtually all incremental production enters global trade channels, creating additional headwind for sugar prices in key trading hubs.

The Global Surplus Framework Reshaping Market Expectations

Divergent forecasts from major analytical institutions underscore the magnitude of the oversupply condition now pressuring sugar prices. The International Sugar Organization (ISO) forecasts a 1.625 MMT global surplus for 2025-26—a dramatic reversal from the 2.916 MMT deficit recorded in 2024-25. This swing alone illustrates the abruptness with which supply dynamics have shifted. The USDA’s December report projected global production climbing 4.6% year-over-year to a record 189.318 MMT, while consumption rises only 1.4% to 177.921 MMT—a clear indication of structural imbalance.

Notably, independent sugar trader Czarnikow estimates the global surplus even more aggressively at 8.7 MMT for the current season, suggesting that official organization forecasts may understate the magnitude of the supply overhang weighing on sugar prices across both physical and derivative markets.

The 2026-27 Outlook: A Brief Reprieve?

A potential counterpoint to the current bearish sugar prices environment emerges from 2026-27 projections. Safras & Mercado suggests that Brazil’s production will moderate to 41.8 MMT, representing a 3.91% decline. Brazilian sugar exports would likewise contract by 11% year-over-year. Covrig Analytics projects the global surplus will compress from current levels to just 1.4 MMT in the subsequent season, implying that weak prices discourage production commitments. This forward-looking adjustment mechanism offers marginal support, but provides little comfort to holders facing the immediate supply deluge that continues suppressing sugar prices in the near term.

Positioning Risks in Futures Markets

An additional risk factor now visible in sugar prices dynamics involves excessive long positioning in London ICE white sugar futures. The Commodity Futures Trading Commission’s Commitment of Traders report revealed that funds expanded net long positions to 49,022 contracts—the highest level recorded since 2011 data tracking began. Such concentration creates vulnerability: any sharp reversal in sentiment could trigger liquidation cascades that amplify downward volatility in sugar prices beyond fundamental supply-demand calculus.

Market Verdict: Supply Dynamics Dominate Sugar Prices Outlook

The convergence of record Brazilian production, India’s export liberalization, and robust Thai output establishes a structural headwind for sugar prices that will likely persist throughout the current marketing season. While subsequent-season forecasts suggest some relief, the immediate near-term trajectory for sugar prices remains oriented toward weakness as excess supply seeks equilibrium. Traders monitoring this commodity should acknowledge that the fundamental mathematics of global oversupply—not temporary weather or demand shocks—currently constitute the dominant force shaping sugar prices across all major trading platforms.