Global Sugar Output Surge Weighs on Prices Amid Market Oversupply

Sugar prices declined across major markets on Wednesday, with the March New York contract falling 0.12 points (0.81%) and London ICE white sugar dropping 1.00 points (0.24%). The London benchmark hit a 2.5-month low, reflecting growing concerns about worldwide supply gluts. Robust production forecasts from leading sugar-growing nations have created downward pressure on prices as output continues to expand faster than consumption demand.

Record Production Forecasts Across Major Regions

The global production outlook shows significant increases ahead. The USDA’s bi-annual report from mid-December projected that worldwide 2025-26 sugar output would climb 4.6% year-over-year to a record 189.318 million metric tons, while human consumption is expected to rise only 1.4% to 177.921 million MT. This widening gap between production growth and consumption growth sets a bearish tone for prices. Global ending stocks for 2025-26 are forecast to decline 2.9% year-over-year to 41.188 million MT, indicating supply buildup relative to demand.

Multiple forecasting agencies have raised their production estimates in recent months. The International Sugar Organization in mid-November predicted a 1.625 million MT surplus for 2025-26 following a 2.916 million MT deficit the prior year. Even more bullish on supply, sugar trader Czarnikow boosted its 2025-26 global surplus estimate to 8.7 million MT in November, up 1.2 million MT from its September forecast.

Brazil and India Lead Output Growth

Brazil continues to dominate as the world’s largest sugar producer, with its output now reaching record levels. Conab, Brazil’s official crop forecasting agency, raised its 2025-26 sugar production estimate to 45 million MT in early November. The USDA’s Foreign Agricultural Service projects Brazil’s 2025-26 output will rise 2.3% year-over-year to a record 44.7 million MT. More significantly, Unica reported that Brazil’s cumulative Center-South sugar production through December rose 0.9% year-over-year to 40.222 million MT, with the ratio of cane crushed specifically for sugar reaching 50.82% in the current season versus 48.16% previously.

India represents the second major growth driver, with its output expanding dramatically. The India Sugar Mill Association reported that cumulative 2025-26 sugar production from October 1 through mid-January reached 15.9 million MT, up 22% year-over-year. The ISMA had raised its full-season 2025-26 production forecast to 31 million MT in November, representing an 18.8% increase year-over-year from earlier projections. This surge stems from favorable monsoon conditions and expanded sugar acreage. The USDA’s Foreign Agricultural Service predicts India’s 2025-26 output will jump 25% year-over-year to 35.25 million MT.

India’s expanded production has triggered potential export growth that weighs on global prices. In November, India’s food ministry approved mills to export 1.5 million MT of sugar for the 2025-26 season, helping to reduce domestic inventory pressures. The ISMA also cut its estimate for sugar utilized in ethanol production to 3.4 million MT from a previous forecast of 5 million MT, freeing additional supplies for export markets.

Thailand, the world’s third-largest producer and second-largest exporter, is also boosting output. The Thai Sugar Millers Corporation projected in October that Thailand’s 2025-26 sugar crop would increase 5% year-over-year to 10.5 million MT. The USDA’s Foreign Agricultural Service forecasts a more modest 2% increase to 10.25 million MT.

Global Surplus Expected to Narrow After 2026

While market conditions remain challenged through 2026, there are some supportive factors emerging. Consulting firm Safras & Mercado stated in late December that Brazil’s sugar production in 2026-27 will fall 3.91% to 41.8 million MT from the 43.5 million MT expected in 2025-26. More dramatically, Safras & Mercado projects Brazil’s sugar exports in 2026-27 will decline 11% year-over-year to 30 million MT.

Covrig Analytics anticipated this supply tightening, raising its 2025-26 global surplus estimate to 4.7 million MT in mid-December. However, Covrig projects that the 2026-27 global surplus will contract significantly to just 1.4 million MT as weak prices discourage production decisions. This normalization of supply-demand balance suggests price support may emerge once the current production cycle fully materializes and demand absorption accelerates into 2026-27.