Will Global Sugar Glut Push Prices Lower? Inside the Supply Surge Reshaping Markets

Sugar futures are sliding today as the market grapples with a mounting surplus story. March NY world sugar #11 fell 0.16 points (-1.06%) while March London ICE white sugar #5 dropped 3.20 points (-0.75%), reflecting bearish sentiment around burgeoning supplies.

The India Factor: Production Boom vs. Export Caps

India’s sugar mill association dropped a bombshell: production from October 1 through mid-December jumped 28% year-over-year to 7.8 MMT, signaling what could become a record harvest. The real shocker? India’s food ministry is capping sugar exports at just 1.5 MMT for 2025/26—below the previously expected 2 MMT. This creates an odd paradox: massive domestic production meeting artificial export restrictions, which could eventually pressure global prices as stockpiles grow.

The driving force behind India’s boom is straightforward. The country experienced its strongest monsoon in five years, with cumulative rainfall reaching 937.2 mm—8% above normal. That’s fueling projections of 31-35.3 MMT in production, up nearly 19-25% year-over-year. India’s National Federation of Cooperative Sugar Factories even flagged a potential 34.9 MMT crop if planted acreage expands as expected.

Interestingly, reduced ethanol demand is also working in sugar’s favor within India. The mills association cut its estimate for sugar used in ethanol production to 3.4 MMT from 5 MMT, freeing up more cane for sugar output. However, this surplus machinery is still creating headwinds for global pricing.

Brazil’s Record Trajectory and Thailand’s Steady Climb

Brazil remains the elephant in the room. Conab, the country’s official crop forecasting agency, raised its 2025/26 estimate to 45 MMT from 44.5 MMT back in November. More recently, Unica reported that Center-South output (the heartland of Brazilian production) rose 8.7% year-over-year in the first half of November to 983 MT, with cumulative production through mid-November reaching 39.179 MMT—up 2.1% year-over-year.

The USDA’s Foreign Agricultural Service projects Brazil will hit a record 44.7 MMT in 2025/26, up 2.3% annually. That’s staggering production volume entering a market already swimming in supply.

Thailand, the world’s third-largest producer, is also ramping up. The Thai Sugar Millers Corp projects a 5% year-over-year increase to 10.5 MMT, extending momentum from the prior season when output hit 10.00 MMT. The USDA forecasts an even higher 10.3 MMT for 2025/26.

The Global Surplus Explosion

Here’s where the real story lives: conflicting surplus forecasts, all pointing in the same direction—downward pressure on prices. The International Sugar Organization projected a 1.625 MMT surplus for 2025/26 after a 2.916 MMT deficit last season. That’s a dramatic swing. Notably, ISO had previously forecast only a 231,000 MT deficit in August, meaning its outlook deteriorated significantly in three months.

Sugar trader Czarnikow went further, estimating a whopping 8.7 MMT surplus globally for 2025/26, up from 7.5 MMT in September. The USDA, meanwhile, is forecasting global production climbing 4.7% year-over-year to a record 189.318 MMT against consumption growth of just 1.4% to 177.921 MMT. That gap matters.

Ending stocks are expected to rise 7.5% year-over-year to 41.188 MMT globally, adding another layer of supply pressure.

Energy Dynamics and the Ethanol Connection

Crude oil weakness is paradoxically playing a dual role. Lower crude undercuts ethanol prices, which could theoretically push mills to prioritize sugar production over fuel alcohol. Yet the same crude pressure reflects broader economic softness—potentially dampening consumption growth expectations. Crude recently hit a 1.75-month low, adding to commodity sector weakness.

Pakistan and Broader Supply Context

While Pakistan doesn’t dominate the global sugar landscape like India, Brazil, or Thailand, its output trends matter for regional dynamics and total supply equations. As major producing nations ramp up, smaller players’ contributions compound the oversupply narrative.

The convergence is clear: Indian production rebounding from a 5-year low, Brazil hitting records, Thailand expanding steadily, and a global surplus replacing last year’s deficit. For sugar traders, the math is simple—abundant supplies meeting modest demand growth typically means one direction for prices. The question isn’t whether there’s downside risk, but how far the market will reprice before finding equilibrium.