Global Sugar Price Pressures Mount as Production Forecasts Soar

Recent price action in major sugar benchmarks reflects mounting supply-side headwinds. March NY sugar #11 futures (SBH26) fell 1.54% during Friday’s session, while London ICE white sugar #5 (SWH26) declined 1.64%, with both contracts responding to an increasingly crowded global market. These sugar price movements signal deepening concerns about surplus production tilting the supply-demand balance sharply toward abundance in 2025-26.

The international sugar market is experiencing dual pressures: near-term production records are weighing on current valuations, while a longer-term supply tightening pattern may eventually support prices. Understanding these cross-currents requires examining the regional production dynamics reshaping global output.

Brazil Drives Record Output, Intensifying Sugar Price Decline

Brazilian production figures dominate the near-term sugar price outlook. Unica, Brazil’s sugarcane industry association, reported that Center-South sugar production through December in the 2025-26 cycle reached 40.222 million metric tons (MMT), up 0.9% year-over-year. More significantly, the proportion of cane crushed for sugar rose to 50.82% from 48.16% in the prior year, indicating a strategic shift toward sugar production over ethanol.

Brazil’s crop forecasting authority, Conab, has raised expectations even higher, projecting 2025-26 production at 45 MMT—an increase from the previous 44.5 MMT estimate. This record-setting trajectory creates consistent downward pressure on sugar prices across export markets. However, a critical inflection point appears on the horizon: Safras & Mercado, a commodity consulting firm, forecasted that 2026-27 production will contract by 3.91% to 41.8 MMT, with exports falling 11% year-over-year to 30 MMT. This prospective tightening represents a potential stabilizing factor for sugar prices beyond the current year.

India Reshapes Export Dynamics and Supply Allocation

India, the world’s second-largest sugar producer, is creating unexpected supply pressure through export policy shifts. The India Sugar Mill Association (ISMA) reported that early-season output from October 1 through mid-January reached 15.9 MMT, up 22% year-over-year. ISMA subsequently raised its full-year 2025-26 production forecast to 31 MMT from 30 MMT, reflecting an 18.8% year-over-year increase driven by favorable monsoon conditions and expanded acreage.

A critical detail is shifting India’s ethanol allocation: ISMA reduced its estimate for sugar destined for ethanol production to 3.4 MMT from a prior estimate of 5 MMT. This reduction frees additional sugar for export markets. India’s government authorized 1.5 MMT of sugar exports for 2025-26, relaxing quota restrictions that were imposed in 2022-23 when production constraints tightened supplies. The prospect of India flooding export channels with additional volumes is creating headwinds for sugar prices globally.

Market Dynamics: Excess Positioning and Surplus Calculations

One measure of current market positioning reveals vulnerability to further sugar price declines. The Commitment of Traders (COT) report for the week ending January 20 showed funds accumulated net long positions in London ICE white sugar futures to a record 49,022 contracts, up 819 from the prior week—the highest level since data collection began in 2011. This excessively bullish positioning raises the risk that any additional negative sentiment could trigger sharp selling pressure.

Surplus projections from multiple forecasters underscore the bearish backdrop. Covrig Analytics raised its 2025-26 global sugar surplus estimate to 4.7 MMT from 4.1 MMT in October. The International Sugar Organization (ISO) forecast a 1.625 million MT surplus for 2025-26, compared to a 2.916 million MT deficit in 2024-25, with surplus driven by India, Thailand, and Pakistan. Even more strikingly, sugar trader Czarnikow boosted its global 2025-26 surplus to 8.7 MMT, up 1.2 MMT from a September estimate of 7.5 MMT.

Thailand and Record Global Output Amplify Sugar Price Headwinds

Thailand, the world’s third-largest producer and second-largest exporter, is also contributing to mounting global supply. The Thai Sugar Millers Corp projected that 2025-26 production will rise 5% year-over-year to 10.5 MMT. This production growth, combined with Brazil and India’s output, ensures ample export availability.

The USDA’s December forecast encapsulates the magnitude of the supply influx: global 2025-26 production is expected to climb 4.6% year-over-year to a record 189.318 MMT, while human consumption is forecast to increase only 1.4% year-over-year to 177.921 MMT. Global ending stocks will decline 2.9% year-over-year to 41.188 MMT, but this reduction is insufficient to absorb production growth. The USDA Foreign Agricultural Service also projects Brazil’s output at a record 44.7 MMT and India’s production at 35.25 MMT (a 25% year-over-year increase), with Thailand reaching 10.25 MMT.

Looking Ahead: When Supply Dynamics May Support Sugar Prices

The transition from 2025-26 to 2026-27 represents a pivotal shift in sugar price dynamics. Covrig Analytics projects that the 2026-27 global sugar surplus will compress to 1.4 MMT, a significant tightening from current projections. As weak sugar prices discourage production investment, output growth will naturally decelerate, gradually supporting prices over time.

The current bear market in sugar reflects a temporary phenomenon: an alignment of record production forecasts across multiple regions. For traders and market participants focused on longer-term positioning, the eventual supply constraint in 2026-27 offers a counterbalance to today’s sugar price pressures. However, in the immediate term, the weight of abundant global supplies continues to dominate sentiment and price action.