Sugar Prices Continue to Decline as Global Output Reaches Record Highs

The global sugar market faces persistent downward pressure as sugar prices slip to multi-year lows. New York world sugar March contracts (SBH26) fell by 0.02 points, while London ICE white sugar (SWH26) declined by 1.60 points during recent trading. This price weakness reflects a fundamental shift in market dynamics: abundant global production is flooding the market, overwhelming demand and pushing sugar prices lower across both exchanges.

Market Downturn Driven by Massive Global Supply Surge

Sugar prices have deteriorated sharply this week, with New York sugar reaching its lowest level in two and a half months and London sugar hitting five-year lows. The root cause is straightforward—production forecasts from major agricultural institutions point to a global sugar surplus for the 2025/26 season. Green Pool Commodity Specialists projected a worldwide surplus of 2.74 million metric tons (MMT), while StoneX forecast an even larger 2.9 MMT surplus. Covrig Analytics subsequently raised its estimate to 4.7 MMT in December, reflecting growing market oversupply concerns.

The International Sugar Organization presents a more moderate view, projecting a 1.625 million MT surplus for 2025/26 following a deficit the previous year. However, even this figure underscores why sugar prices remain under pressure—when supply outpaces consumption, price support evaporates. Looking further ahead, Czarnikow raised its 2025/26 global surplus estimate to 8.7 MMT, suggesting that sugar prices may face extended weakness unless supply dynamics shift unexpectedly.

Record Production Across Brazil, India, and Thailand

The surge in global sugar output explains the current sugar price environment. Brazil’s Center-South region, the world’s largest sugar producing area, generated 40.222 MMT from the 2025/26 season start through December—a 0.9% increase year-over-year. More significantly, Brazil’s entire 2025/26 sugar production is forecasted to reach a record 44.7 MMT according to the USDA, up 2.3% from the previous year. Conab, Brazil’s crop agency, increased its estimate to 45 MMT in November, reinforcing expectations for record Brazilian output that will inevitably weigh on sugar prices.

India has emerged as an unexpected production powerhouse. The India Sugar Mill Association (ISMA) reported that output from October 1 to January 15 reached 15.9 MMT, a remarkable 22% increase year-over-year. ISMA revised its full 2025/26 production forecast to 31 MMT, up 18.8% annually. The USDA expects India’s production to surge to 35.25 MMT due to favorable monsoon conditions, representing a 25% increase. This explosive growth in Indian sugar output directly impacts sugar prices by expanding the global supply pool.

Thailand, the world’s third-largest producer and second-largest exporter, is also ramping up production. The Thai Sugar Millers Corp forecasted a 5% increase to 10.5 MMT in 2025/26, while the USDA projects 10.25 MMT output. With these three nations producing record volumes, sugar prices face formidable headwinds.

Export Pressures and Policy Shifts

Adding to sugar price challenges is India’s pivot toward increased exports. The country’s food ministry authorized mills to export 1.5 MMT of sugar during the 2025/26 season, and government officials signaled willingness to approve additional export permits to address domestic oversupply. This export orientation, combined with ISMA’s decision to reduce ethanol usage estimates from 5 MMT to 3.4 MMT (freeing more sugar for market sales), means additional supplies will pressure sugar prices globally.

India previously imposed export quotas in 2022/23 after weather disruptions tightened supplies, but the current environment is the opposite—abundance is driving policy toward exports, which weighs further on sugar prices worldwide.

Global Production Reaches Record Levels

The USDA’s December report projected that global sugar production for 2025/26 will reach a record 189.318 MMT, a 4.6% increase year-over-year. Simultaneously, global human consumption is expected to reach only 177.921 MMT, up just 1.4%. This supply-demand imbalance is the fundamental reason sugar prices continue to fall. With production significantly outpacing consumption growth, the market remains oversupplied, limiting any potential recovery in sugar prices.

Global sugar ending stocks for 2025/26 are forecasted to decrease marginally to 41.188 MMT, still leaving substantial inventory levels that sustain downward pressure on sugar prices.

Looking Ahead: When Might Sugar Prices Stabilize?

Forecasters see a modest improvement potential in 2026/27. Safras & Mercado predicted that Brazil’s production would decline by 3.91% to 41.8 MMT in 2026/27, while exports would drop 11% to 30 MMT. Covrig Analytics expects the global sugar surplus to shrink to 1.4 MMT in 2026/27 as lower prices discourage production investments. However, that improvement remains over a year away.

For now, the sugar price outlook remains challenged by massive global production, record output from major producers, and a policy environment favoring exports from India. Until supply-demand fundamentals tighten, sugar prices are likely to remain under pressure. Traders and producers monitoring sugar prices should prepare for an extended period of softness as the 2025/26 season production cycle unfolds.