Global Sugar Stocks Swell as Producers Flood Market with Record Output

2026-01-21 02:03:15

Sugar prices enjoyed a modest rebound Friday, with March NY world sugar #11 (SBH26) climbing +0.39 cents (+2.68%) and March London ICE white sugar #5 (SWH26) gaining +10.20 points (+2.44%). The bounce came as traders covered short positions ahead of the three-day US holiday weekend, but the rally masks a deeper market challenge: a structural oversupply threatening to weigh on prices well into 2026.

The Supply Explosion Nobody’s Talking About

The real story isn’t the Friday pop—it’s the relentless production surge reshaping global sugar stocks. On the demand side, the USDA projects 2025-26 global human consumption will reach just 177.921 million MT. On the supply side? A staggering 189.318 million MT of production. That’s an 11.4 million MT gap that has to go somewhere.

Covrig Analytics just raised its 2025-26 global sugar surplus estimate to 4.7 MMT from 4.1 MMT in October. Meanwhile, rival forecaster Czarnikow went even more bearish, estimating an 8.7 MMT surplus—suggesting the market is undershooting the actual inventory buildup.

India and Brazil Are Flooding the Market

India, the world’s second-largest producer, is driving much of this oversupply. The National Federation of Cooperative Sugar Factories reported that India’s 2025-26 output hit 15.9 MMT by mid-January, up +21% year-over-year. The India Sugar Mill Association expects full-season production to reach 31 MMT, a +18.8% y/y jump.

What’s worse for prices: India is aggressively exporting. The government approved 1.5 MMT of sugar exports for 2025-26, and the food secretary signaled the door could open further to relieve domestic gluts. India’s ethanol-for-sugar conversion is also being scaled back—the ISMA cut its ethanol demand estimate from 5 MMT to 3.4 MMT, freeing up more sugar for export.

Brazil isn’t helping either. Conab raised its 2025-26 production forecast to 45 MMT, while the USDA’s Foreign Agricultural Service pegged it at a record 44.7 MMT. That’s a +2.3% y/y increase despite earlier concerns about delayed crushing. The ratio of cane diverted to sugar (not ethanol) hit 50.91% in 2025-26, up from 48.19% in 2024-25—a signal that crushers are optimizing for sugar volume, not fuel production.

Unica’s data showed Brazil’s Center-South region produced 40.158 MMT through mid-December, up +0.9% y/y, with more crushing expected in the season’s final weeks.

Thailand Joins the Bearish Parade

Thailand, the world’s third-largest producer and second-largest exporter, isn’t easing pressure. The Thai Sugar Millers Corp projects 2025-26 output will jump +5% y/y to 10.5 MMT. The USDA’s FAS forecasts a +2% y/y increase to 10.25 MMT. Either way, more Thai sugar is entering global markets.

The International Sugar Organization weighed in on November 17, forecasting a 1.625 million MT surplus in 2025-26 following a 2.916 million MT deficit in 2024-25. ISO attributed the swing to surging production in India, Thailand, and Pakistan—all competing for export share.

The Sugar Stocks Trap: Rising Inventories, Falling Prices

As sugar stocks accumulate globally, the math becomes inescapable. The USDA projects 2025-26 global ending stocks will fall just -2.9% y/y to 41.188 MMT—meaning stocks remain elevated despite record consumption. That’s the trap: production growth is outpacing consumption growth, forcing inventories higher.

Friday’s Commitment of Traders report showed funds held a record 48,203 net long positions in London ICE white sugar futures as of the latest week, up 4,544 from the prior week (data back to 2011). That’s a dangerously crowded positioning ahead of an oversupplied market—a recipe for sharp reversals if sentiment shifts.

When Will This End?

Covrig Analytics offers a glimmer: the 2026-27 surplus is projected to shrink to just 1.4 MMT as weak prices discourage planting. Safras & Mercado expects Brazil’s 2026-27 production to fall -3.91% to 41.8 MMT, with exports declining -11% y/y to 30 MMT.

For now, though, sugar stocks remain the market’s albatross. While traders caught short positions ahead of Monday’s holiday, the structural headwinds—record production, rising inventories, and competitive export pressures—suggest the bounce is tactical, not strategic. Until global sugar stocks start visibly contracting, prices will struggle to find sustained traction.

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