Global Sugar Production Surge Caps Price Rally as Brazil's Currency Rebounds

Futures markets showed mixed signals on Friday as sugar prices climbed to multi-week highs, yet underlying supply dynamics remain decidedly bearish. March NY sugar futures (SBH26 gained +1.68% closing at +0.25, while March London ICE white sugar (SWH26 advanced +1.23% or +5.20 points. The rally traced back to a technical bounce in Brazil’s currency—the real strengthened to 1-week highs versus the dollar, prompting short-covering activity in sugar contracts.

Currency Moves vs. Fundamental Reality

The Brazilian real’s appreciation should theoretically discourage sugar exports from Brazil’s producers, providing temporary price support. However, this technical bounce masks the deeper bearish picture taking shape across the world’s major sugar-producing regions. The International Sugar Organization (ISO) now forecasts a surplus of 1.625 million MT for 2025-26, a dramatic reversal from the 2.916 million MT deficit recorded in 2024-25. This shift reflects unprecedented production expansion from India, Thailand, and Pakistan converging in the same season.

India’s Sugar Plant Output Explodes Higher

India Sugar Mill Association (ISMA) data released November 11 reveals the scale of the supply buildup. The organization raised its 2025/26 sugar production estimate to 31 MMT from 30 MMT—representing an +18.8% year-over-year jump. Between October and November alone, Indian sugar mill crushing surged +43% y/y to 4.11 MMT, with 428 active sugar mills processing cane as of November 30, up from 376 mills a year prior.

More notably, India’s favorable monsoon rainfall—937.2 mm as of late September, 8% above normal and the strongest in five years—has set conditions for an even larger harvest. India’s National Federation of Cooperative Sugar Factories projects 2025/26 production could reach 34.9 MMT, up +19% y/y. This recovery follows a sharp -17.5% y/y decline in 2024/25 that left supplies at 5-year lows of 26.1 MMT.

Brazil and Thailand Adding to Supply Pressure

Brazil’s sugar output trajectory remains formidable despite price weakness. Conab, the country’s official crop forecaster, raised its 2025/26 estimate to 45 MMT from 44.5 MMT in November. By mid-November, Center-South region output—representing roughly 85% of total Brazilian production—had already climbed +8.7% y/y to 983 MT, with cumulative 2025-26 production at 39.179 MMT, up +2.1% y/y. Record-level harvests are expected to flow into export channels, given Brazil’s position as the world’s largest supplier.

Thailand, the third-largest producer and second-largest exporter, is also ramping up. The Thai Sugar Millers Corp projects 2025/26 production will rise +5% y/y to 10.5 MMT, building on a +14% y/y increase in 2024/25 to 10.00 MMT.

Global Surplus Estimates Keep Widening

Market analysts continue raising surplus forecasts. Sugar trader Czarnikow on November 5 increased its global 2025/26 surplus estimate to 8.7 MMT, up +1.2 MMT from a September estimate of 7.5 MMT. This dwarfs the 231,000 MT deficit Czarnikow had forecast just three months earlier.

The USDA’s May report projected global 2025/26 production at a record 189.318 MMT, up +4.7% y/y, against human consumption of 177.921 MMT, up only +1.4% y/y. Ending global stocks are forecast to climb +7.5% y/y to 41.188 MMT. India’s export quota remains restricted—capped at 1.5 MMT for 2025/26 per India’s food ministry announcement November 14—yet this still represents substantial additional supply hitting world markets compared to recent years.

What’s Next for Prices?

While the Brazilian real’s strength provided Friday’s technical bounce, the fundamental supply-demand balance remains tilted toward lower prices. The convergence of near-record crops from all three major producers—amplified by India’s export availability and favorable agricultural conditions—suggests consolidation ahead rather than sustained rally strength.