Global Sugar Supply Surge Overwhelms Price Support, Crude Oil Weakness Adds to Pressure

The question of how much does sugar cost has become increasingly complex as multiple supply headwinds converge on the market simultaneously. March NY world sugar #11 futures dropped 0.03 points (-0.20%) while March London ICE white sugar #5 declined 1.40 points (-0.33%), reflecting mounting bearish sentiment driven by anticipated record global production and recent crude oil weakness.

Crude Oil Slump Redirects Production Away from Ethanol

WTI crude oil has plunged to its lowest level in 4.75 years, a development with direct implications for sugar economics. Lower ethanol prices reduce the profitability of diverting sugarcane toward biofuel production, encouraging mills worldwide to allocate more cane crushing capacity toward sugar output instead. This production shift is expected to increase global sugar supplies materially, placing additional downward pressure on already-weak prices.

India’s Record Production Reshapes Market Outlook

India, the world’s second-largest sugar producer, is poised to deliver the industry’s most significant supply shock. The India Sugar Mill Association (ISMA) raised its 2025/26 production forecast to 31 MMT on November 11, up from 30 MMT previously—representing an 18.8% year-over-year increase. This revision followed another bullish surprise when ISMA reported that Indian sugar production from October 1 through December 15 surged 28% annually to 7.8 MMT.

The implications for exports are substantial. India’s Ministry of Food approved 1.5 MMT of sugar exports for 2025/26, below the earlier 2 MMT estimate, but this still represents meaningful supply entering global markets. Notably, ISMA reduced its estimate for sugar used in domestic ethanol production to 3.4 MMT from 5 MMT projected in July—another indication that more sugar will be available for international markets rather than fuel applications.

The National Federation of Cooperative Sugar Factories projects even more aggressive growth, forecasting India’s 2025/26 production at 34.9 MMT with a 19% year-over-year jump, driven by expanded cane acreage. This projection comes after India experienced a sharp -17.5% production decline in 2024/25, when output contracted to a five-year low of 26.1 MMT.

Brazil and Thailand Extend the Production Cycle

Brazil’s sugar industry is also tracking toward record output. Conab, the country’s government crop agency, raised its 2025/26 forecast to 45 MMT in November from the previous 44.5 MMT estimate. Unica reported that cumulative Center-South regional sugar output through November reached 39.904 MMT, a 1.1% year-over-year gain, with the share of cane directed to sugar production climbing to 51.12% in 2025/26 from 48.34% in the prior season.

Thailand, the world’s third-largest producer and second-largest exporter, is also anticipated to expand supplies. The Thai Sugar Millers Corp projected a 5% year-over-year increase in the 2025/26 crop to 10.5 MMT.

Global Supply Surplus Creates Extended Headwind

The cumulative impact of these regional production increases has prompted major forecasters to predict a pronounced global surplus. The International Sugar Organization (ISO) issued a significantly revised November 17 forecast calling for a 1.625 million MT surplus in 2025-26, a dramatic reversal from the 2.916 million MT deficit in 2024-25. ISO attributes the turnaround to expanded output in India, Thailand, and Pakistan.

This represents a substantial upward revision from ISO’s August projection, which had forecast only a 231,000 MT deficit for the same period. ISO expects global sugar production to climb 3.2% year-over-year to 181.8 million MT in 2025-26.

Commercial trader Czarnikow painted an even more bearish picture on November 5, boosting its global 2025/26 surplus estimate to 8.7 MMT—a jump of 1.2 MMT from its September estimate of 7.5 MMT. Such a surplus would severely constrain price appreciation and likely extend the current weakness.

USDA Confirms Record Production and Consumption Trajectory

The U.S. Department of Agriculture’s Foreign Agricultural Service (FAS) provided its authoritative assessment in a May 22 bi-annual report, projecting that global 2025/26 sugar production would expand 4.7% year-over-year to a record 189.318 MMT. The USDA simultaneously forecast that global human sugar consumption would increase 1.4% year-over-year to 177.921 MMT—meaningful growth that nonetheless remains outpaced by production.

The USDA also warned that global sugar ending stocks would accumulate 7.5% year-over-year to 41.188 MMT, indicating that supply growth substantially exceeds demand expansion.

On a regional basis, FAS predicted Brazil’s 2025/26 production at a record 44.7 MMT (2.3% higher), India’s output at 35.3 MMT (25% higher), and Thailand’s crop at 10.3 MMT (2% higher). These projections align with the directional expectations from industry bodies but often exceed them, suggesting the surplus picture may be even more challenging than private estimates suggest.

The Outlook: Structural Oversupply for the Foreseeable Future

The convergence of record or near-record production across all major sugar regions—compounded by crude oil weakness that incentivizes sugar over ethanol production—creates a structurally bearish environment. With global supplies expanding faster than consumption demand and stock levels building substantially, sugar prices face persistent headwinds that are unlikely to reverse until production moderates or demand accelerates unexpectedly.