Global Sugar Glut Deepens as Major Producers Ramp Up Output

The sugar market faces mounting pressure from a perfect storm of oversupply signals, with crude oil weakness triggering a supply surge that threatens to overwhelm demand. March New York sugar #11 futures declined 0.87% on Tuesday, while London ICE white sugar #5 fell 0.80%, both retreating amid broader commodity market turbulence driven by crude’s collapse to 4-year lows.

The Crude-Sugar Connection: How Oil Prices Shape Cane Economics

When WTI crude sank to its lowest level in nearly five years, it created an immediate ripple effect across the global cane sugar supply chain. Lower oil prices reduce ethanol profitability, shifting the economic calculus for sugar mills worldwide. With ethanol becoming less attractive, mills are redirecting their cane crushing operations toward direct sugar production rather than biofuel feedstock, effectively flooding the market with additional sweetener volumes.

This structural shift arrives at the worst possible moment. Global sugar production forecasts reveal a market drowning in excess capacity, fundamentally reshaping the cane sugar formula that once supported price stability.

Record Harvests Converge: India, Brazil, and Thailand Lead the Surge

The world’s three largest sugar producers are simultaneously forecasting bumper crops that will transform global supply dynamics.

India’s Production Explosion

India’s sugar output has become the primary driver of oversupply. The India Sugar Mill Association revised its 2025-26 production estimate upward to 31 MMT, a +18.8% year-over-year increase from the prior season’s depressed 26.1 MMT baseline. More aggressive estimates from the National Federation of Cooperative Sugar Factories project even higher volumes at 34.9 MMT, representing a +19% annual jump and marking India’s recovery from last season’s 5-year production low.

Critically, India’s food ministry approved 1.5 MMT of sugar exports for 2025-26, below earlier projections of 2 MMT. However, this modest constraint is offset by the ISMA’s decision to reduce ethanol-destined sugar consumption to 3.4 MMT from a previous 5 MMT forecast, freeing up additional volumes for export markets.

Brazil’s Steady Expansion

Brazil’s 2025-26 sugar crop estimates have crept higher with each forecaster update. Conab, the nation’s official crop agency, raised its projection to 45 MMT in November from 44.5 MMT. The cumulative Center-South output through November reached 39.904 MMT, up 1.1% year-over-year, while the percentage of cane directed toward sugar production climbed to 51.12% from 48.34% in the prior season.

The USDA’s Foreign Agricultural Service projects Brazil’s output will reach a record 44.7 MMT, up 2.3% annually.

Thailand’s Supporting Role

Thailand, the world’s third-largest producer and second-largest exporter, is also expanding. The Thai Sugar Millers Corp forecasted a +5% production increase to 10.5 MMT for 2025-26, with USDA estimates slightly conservative at 10.3 MMT.

The Surplus Calculus: Competing Forecasts Paint an Oversupply Picture

The International Sugar Organization projected a 1.625 million MT surplus for 2025-26, a dramatic reversal from the 2.916 million MT deficit in 2024-25. This represents a swing of over 4.5 million MT in less than a year, driven by India, Thailand, and Pakistan’s production gains.

The sugar trader Czarnikow painted an even grimmer picture, raising its 2025-26 global surplus estimate to 8.7 MMT, up 1.2 MMT from September forecasts. That contrasts sharply with ISO’s August projection of just a 231,000 MT surplus—a massive revision within months.

Global production is forecast to climb 4.7% to 189.318 MMT according to the USDA, outpacing human consumption growth of just 1.4% to 177.921 MMT. The imbalance is crystallizing in rising ending stocks, projected to increase 7.5% to 41.188 MMT.

Why Sugar Prices Remain Under Siege

With supply crushing demand growth, sugar has limited support. The cane sugar formula that once balanced global markets has shifted decisively toward oversupply, with each data release adding to the bearish narrative. Crude oil weakness eliminates the ethanol safety valve. Major producers are simultaneously harvesting record crops. And exporters are seeking new outlets for excess volume.

This convergence explains why sugar futures struggled on Tuesday despite steady global demand. The market isn’t responding to immediate consumption needs—it’s bracing for a persistent structural surplus that will likely weigh on prices through the marketing season.