Sugar Market Under Pressure as Major Producers Ramp Up Output Despite Friday's Rally

Sugar futures experienced an intraday surge on Friday, driven partly by the Brazilian Real’s strength against the dollar, but underlying supply dynamics paint a bearish picture for traders. March New York sugar #11 futures rose 0.25 cents (+1.68%), while March London ICE white sugar #5 climbed 5.20 cents (+1.23%), marking a 2-week and 1-week high respectively. The real’s rally triggered short-covering in the sugar pit, yet the strength of Brazil’s currency typically suppresses export competitiveness from local sugar producers and cane sugar plant operators.

Global Supply Glut Reshaping the Market Landscape

The International Sugar Organization (ISO) dramatically shifted its outlook on November 17, projecting a 1.625 million MT surplus for 2025-26—a stunning reversal from the 2.916 million MT deficit forecasted for 2024-25. Just three months earlier in August, ISO had predicted only a 231,000 MT deficit, underscoring how quickly the supply picture is deteriorating. The organization now forecasts global sugar production climbing +3.2% year-over-year to 181.8 million MT in 2025-26.

Even more aggressive is Czarnikow, the influential sugar trading firm. On November 5, Czarnikow raised its 2025-26 global surplus estimate to 8.7 MMT, up 1.2 MMT from a September projection of 7.5 MMT. This expanding surplus is being fueled primarily by India, Thailand, and Pakistan ramping production amid favorable growing conditions.

India’s Sugar Boom and Export Expansion

India’s trajectory represents the most dramatic supply shift. The India Sugar Mill Association (ISMA) raised its 2025-26 production forecast to 31 MMT on November 11, up from a previous estimate of 30 MMT and representing a +18.8% year-over-year surge. Earlier, on November 4, India reported that October-November sugar output jumped +43% year-over-year to 4.11 MMT alone, with 428 cane sugar plants crushing cane as of November 30, compared to 376 a year prior.

Critically, ISMA cut its ethanol-use estimate to 3.4 MMT from 5 MMT, potentially freeing up 1.6 MMT for export. Though India’s food ministry limited exports to 1.5 MMT on November 14—below earlier estimates of 2 MMT—the country remains poised to export significantly more. Abundant monsoon rains averaging 937.2 mm (8% above normal) through September 30 have created ideal conditions for a larger crop.

Brazil’s Record Production Outlook

Brazil, the world’s largest sugar producer, shows no signs of slowing. Conab, Brazil’s official crop forecasting agency, raised its 2025-26 production estimate to 45 MMT on November 4, up from 44.5 MMT. More recently, Unica reported that Center-South sugar output in the first half of November rose +8.7% year-over-year to 983 MT, with cumulative 2025-26 output through mid-November climbing +2.1% year-over-year to 39.179 MMT. The USDA’s Foreign Agricultural Service projects Brazil’s output at 44.7 MMT, a +2.3% year-over-year increase.

Thailand and Widening Global Surplus

Thailand, the world’s third-largest producer and second-largest exporter, is expected to contribute further supply pressure. The Thai Sugar Millers Corp projects 2025-26 output increasing +5% to 10.5 MMT. The USDA forecasts even higher at 10.3 MMT with a +2% year-over-year gain.

The USDA’s May 22 report painted the scale of the oversupply challenge: global 2025-26 production is projected at a record 189.318 MMT (+4.7% year-over-year), while consumption rises a mere +1.4% to 177.921 MMT. Global ending stocks are forecast to climb +7.5% to 41.188 MMT—a critical metric signaling sustained downward price pressure ahead.

The Trading Takeaway

Friday’s price rally reflects short-term sentiment rather than fundamental improvement. With three of the world’s top four sugar-producing regions—Brazil, India, and Thailand—all significantly increasing output, and with a projected global surplus exceeding 8 MMT, the structural headwinds remain formidable for bulls. Sugar traders should remain cautious as the market absorbs the reality of record production and inventory accumulation throughout 2025-26.