Global Sugar Supply Surge Pressures Prices Lower as Major Producers Ramp Up Output

Sugar prices declined significantly this week, sliding to 1-week lows as global commodity markets grapple with an anticipated supply surge. March New York sugar futures (SBH26) retreated -0.28 points (-1.90%), while March London ICE white sugar (SWH26) dropped -6.40 points (-1.52%), reflecting broad weakness across the sector.

India’s Export Expansion Weighs on Markets

The primary catalyst for weakness stems from India’s policy shift on sugar exports. The country’s food secretary recently signaled that the government may approve additional sugar export licenses to address mounting domestic supply pressures. This announcement follows November’s confirmation that India would permit mills to export 1.5 MMT during the 2025/26 season.

The fall season in India proved more productive than initially expected. According to the India Sugar Mill Association (ISMA), sugar production from October 1 to December 15 surged +28% year-over-year to reach 7.83 MMT. This strong harvest has prompted upward revisions to full-year forecasts. ISMA raised its 2025/26 production estimate to 31 MMT from the prior 30 MMT projection—representing an +18.8% y/y increase.

Adding to export availability, ISMA trimmed its ethanol allocation forecast to 3.4 MMT from an earlier 5 MMT estimate, freeing up additional sugar for international sales. The National Federation of Cooperative Sugar Factories projects even more ambitious output, forecasting 2025/26 production could reach 34.9 MMT, up +19% y/y, driven by expanded planted acreage. This would mark a dramatic recovery from 2024/25’s -17.5% decline, when production fell to just 26.1 MMT—a 5-year low.

Brazil and Thailand Bolster Global Supplies

India’s production surge compounds broader global headwinds. Brazil’s agricultural agency Conab recently elevated its 2025/26 sugar forecast to 45 MMT from 44.5 MMT. Through November, the Center-South region has already crushed enough cane to produce 39.904 MMT, up +1.1% y/y, with a higher crush allocation (51.12% versus 48.34% last year) prioritizing sugar over ethanol.

Meanwhile, weakness in the Brazilian real—trading at 4.5-month lows—incentivizes export sales, adding further downward pressure on global prices. Thailand’s Sugar Millers Corp projects the world’s third-largest producer will boost 2025/26 output by +5% y/y to 10.5 MMT, maintaining its position as the second-largest exporter.

Market Surplus Forecasts Signal Continued Pressure

The International Sugar Organization’s latest outlook confirmed the bearish tone. ISO now forecasts a 1.625 million MT surplus for 2025-26, a dramatic shift from August’s 231,000 MT deficit projection. This reversal reflects production increases across India, Thailand, and Pakistan. ISO estimates global sugar production will climb +3.2% y/y to 181.8 million MT.

Sugar trader Czarnikow independently raised its 2025/26 global surplus estimate to 8.7 MMT, up 1.2 MMT from September’s 7.5 MMT forecast. The USDA’s latest bi-annual report projects global production reaching a record 189.318 MMT (+4.6% y/y), while global consumption will only rise +1.4% y/y to 177.921 MMT. Despite higher consumption, global ending stocks are projected to fall -2.9% y/y to 41.188 MMT.

The USDA’s Foreign Agricultural Service specifically forecasts Brazil at 44.7 MMT (+2.3% y/y record high), India at 35.25 MMT (+25% y/y, supported by favorable monsoons and expanded acreage), and Thailand at 10.25 MMT (+2% y/y).

These mounting supply pressures across the world’s three largest producers—India, Brazil, and Thailand—have established a structural headwind for sugar prices near term, with market participants pricing in the reality of abundant global supplies ahead.