Global Sugar Market Faces Supply Pressures as Multiple Producers Ramp Up Output

Sugar futures declined today as market participants grapple with mounting evidence of an oversupplied global market. March contracts in New York fell 0.08 cents (-0.54%) while London ICE white sugar futures slipped 3.40 cents (-0.80%), reflecting broader weakness across the complex.

Revised Surplus Estimates Point to Inventory Buildup

Covrig Analytics significantly raised its projection for 2025/26, now forecasting a global sugar surplus of 4.7 million metric tons compared to their October estimate of 4.1 MMT. The expansion of this surplus figure underscores growing concerns about inventory levels. However, some relief emerged from projections that the following year’s balance will tighten considerably—Covrig expects the 2026/27 surplus to shrink to just 1.4 MMT as lower price levels begin to suppress production incentives.

Index Rebalancing Could Provide Near-Term Support

Citigroup estimates that the two largest commodity indexes, BCOM and S&P GSCI, will trigger approximately $1.2 billion in inflows to sugar futures this week as part of their annual rebalancing cycle. This index-related buying activity may help stabilize prices in the near term.

Production Shifts Across Major Sugar Nations

India’s Surge Pressures Prices

India, the world’s second-largest producer in the sugar market, has demonstrated significantly stronger output dynamics. The India Sugar Mill Association reported that production from October through December 2025 jumped 25% year-over-year to 11.90 MMT. For the full 2025/26 season, ISMA raised its estimate to 31 MMT from 30 MMT previously, representing an 18.8% annual increase. As the largest sugar producing country by output volume, India’s production expansion carries outsized implications for global balance sheets.

Government policy decisions are amplifying export pressures. India’s food ministry approved exports of 1.5 MMT for the 2025/26 season after relaxing export restrictions originally implemented in 2022/23. Additionally, the ISMA cut its forecast for ethanol diversion to just 3.4 MMT from 5 MMT previously, potentially freeing up more sugar for export channels.

Brazil and Thailand Also Expanding

Brazil’s 2025/26 output is tracking toward record levels. Conab raised its production estimate to 45 MMT in November, while Unica data through November shows Center-South region output up 1.1% year-over-year at 39.9 MMT. The portion of cane directed toward sugar crushing increased to 51.12% from 48.34% in the prior season.

Looking forward, however, Safras & Mercado projects a reversal. Brazil’s 2026/27 output is expected to decline 3.91% to 41.8 MMT, with exports falling 11% to 30 MMT—providing some bullish support for longer-term price dynamics.

Thailand, the world’s third-largest producer and second-largest exporter, is also expanding. The Thai Sugar Millers Corp projects a 5% increase in 2025/26 output to 10.5 MMT.

International Forecasts Signal Record Production Ahead

The USDA’s December report painted a picture of robust expansion. Global 2025/26 production is expected to reach a record 189.3 MMT, up 4.6% year-over-year, while human consumption climbs 1.4% to 177.9 MMT. Global ending stocks are projected to decline 2.9% to 41.2 MMT.

The USDA Foreign Agricultural Service added specific country projections: Brazil at 44.7 MMT (+2.3%), India at 35.25 MMT (+25%), and Thailand at 10.25 MMT (+2%). These forecasts collectively point to expanded supplies entering the market.

The International Sugar Organization presented a more conservative surplus view at 1.625 MMT for 2025/26, yet still projected a +3.2% rise in global production to 181.8 MMT driven by increased output across India, Thailand, and Pakistan. Conversely, sugar trader Czarnikow offered a more bearish assessment, raising its global 2025/26 surplus estimate to 8.7 MMT from 7.5 MMT.

The convergence of these supply-side dynamics suggests that near-term price support will remain challenged unless demand accelerates or production forecasts decline materially.