India's Sugar Industry Boom Weighs on Global Prices as Production Surges

Sugar futures are trading lower today amid a confluence of bearish signals sweeping through commodity markets. March NY world sugar #11 fell -0.16 points (-1.06%), while March London ICE white sugar #5 dropped -3.20 points (-0.75%). The primary culprit behind today’s weakness is a dramatic production surge across multiple regions, particularly in India, combined with sliding crude oil prices that reduce ethanol’s economic appeal.

The Sugar Industry in India Drives Global Supply Expansion

India’s sugar sector has become the epicenter of supply growth. The India Sugar Mill Association reported that from October 1 through mid-December, Indian sugar production jumped +28% year-over-year to 7.8 MMT. For the full 2025/26 season, ISMA revised its estimate upward to 31 MMT from the previous 30 MMT forecast—a +18.8% annual increase. This production surge is driven by abundant monsoon rainfall, which hit 937.2 mm as of late September, representing 8% above normal and the strongest monsoon conditions in five years.

A critical shift in India’s processing strategy is also amplifying supply concerns. ISMA cut its estimate for sugar used in ethanol production to 3.4 MMT from an earlier July projection of 5 MMT. This reallocation means more sugarcane is being directed toward crystalline sugar output rather than biofuel feedstock, freeing up additional volumes for export. India’s food ministry recently approved 1.5 MMT of sugar exports for 2025/26, down from prior expectations of 2 MMT, yet this quota still represents significant international supply pressure.

Crude Oil Weakness Creates Biofuel Headwinds

Crude oil’s retreat to a 1.75-month low is undercutting ethanol economics globally. As crude prices weaken, the incentive for sugar mills to process cane into ethanol diminishes, prompting a shift toward higher-margin sugar production. This dynamic, while potentially beneficial for crystalline sugar output, exacerbates the global surplus concern.

Brazil and Thailand Expand Output in Parallel

Brazil’s sugarcane crush continues accelerating. Unica reported that Center-South sugar output in early November rose +8.7% year-over-year to 983 MT, with cumulative 2025-26 production through mid-November at 39.179 MMT, up +2.1% annually. Brazil’s crop forecasting agency Conab raised its full-year 2025/26 projection to 45 MMT from 44.5 MMT, underscoring the region’s robust production trajectory. The USDA’s Foreign Agricultural Service predicts Brazil will reach a record 44.7 MMT, growing +2.3% year-over-year.

Thailand, the world’s third-largest producer and second-largest exporter, is also increasing output. The Thai Sugar Millers Corp projects Thailand’s 2025/26 crop will climb +5% annually to 10.5 MMT. The USDA forecasts Thai production at 10.3 MMT, +2% year-over-year.

Global Balance Sheet Deteriorates

The International Sugar Organization drastically shifted its outlook on November 17, now forecasting a 1.625 million MT surplus for 2025-26, a dramatic reversal from its August projection of a 231,000 MT deficit. This pivot reflects expanded output in India, Thailand, and Pakistan. The revised forecast followed a 2.916 million MT deficit in 2024-25.

Sugar trader Czarnikow paints an even more dire picture, raising its global 2025/26 surplus estimate to 8.7 MMT, up +1.2 MMT from a September estimate of 7.5 MMT. The USDA projects global sugar production will reach a record 189.318 MMT in 2025-26, a +4.7% annual increase, while global consumption will only rise +1.4% to 177.921 MMT. Ending stocks are forecast to climb +7.5% to 41.188 MMT, further pressuring valuations.

Market Implications and Price Outlook

The mathematical reality is stark: production growth significantly outpaces consumption gains, creating a structural surplus environment. With India maximizing its sugar exports under new quota arrangements, Brazil operating at record capacity, and Thailand adding incremental volume, global inventory levels face accumulation. Unless demand accelerates unexpectedly or major producers curtail output, sugar prices face continued downward pressure from this oversupply dynamic.