Global Sugar Price Slump Extends as Production Surplus Widens Across Major Exporters

The commodity markets have witnessed a severe contraction in sugar valuations, with prices touching their lowest levels in over five years. This persistent weakness reflects a fundamental shift in global supply dynamics, as major producing nations ramp up output to unprecedented levels. The current sugar price collapse signals a structural oversupply situation that is expected to persist through the medium term.

Recent Market Movements and Price Deterioration

March New York world sugar #11 (SBH26) futures declined 0.06 points (0.43%), while London ICE white sugar #5 (SWH26) dropped 8.20 points (2.12%) in recent trading. These losses extend a five-month downtrend that has pushed sugar price quotations to multi-year depths. The selloff has been relentless, driven by consensus expectations that global markets will remain awash in supplies.

Multiple commodity analysts have painted a grim picture for the near term. Czarnikow projects a 3.4 million metric ton (MMT) surplus for the 2026/27 season, following an 8.3 MMT glut in 2025/26. Green Pool Commodity Specialists forecasted a 2.74 MMT surplus for 2025/26 and a 156,000 MT surplus for 2026/27, while StoneX anticipates a 2.9 MMT global surplus in the 2025/26 season. These projections underscore why sugar price pressures remain intense.

Production Expansion in Brazil, India, and Thailand

Brazil’s Center-South region produced 40.236 MMT of sugar through mid-January for the 2025/26 season, marking a 0.9% year-over-year increase. More significantly, the proportion of sugarcane directed toward sugar production rose to 50.78% in 2025/26, up from 48.15% in the previous season. Conab has raised its full-year production forecast to 45 MMT for 2025/26, with the prospect of record output maintaining downward pressure on sugar price levels.

India has emerged as a production powerhouse. The India Sugar Mill Association (ISMA) reported that output from October 1 to January 15 reached 15.9 MMT, up 22% year-over-year. ISMA has raised its full-season estimate to 31 MMT, representing an 18.8% increase. Perhaps more critically for global markets, ISMA lowered its forecast for ethanol consumption to 3.4 MMT, potentially freeing up an additional 1.2 MMT for export. The government has signaled willingness to approve additional export volumes to tackle domestic oversupply, with the food ministry authorizing 1.5 MMT of exports for the 2025/26 season.

Thailand, the world’s third-largest producer, is also expanding aggressively. The Thai Sugar Millers Corp forecasted a 5% production increase to 10.5 MMT for 2025/26. Combined with Brazil and India’s gains, this expansion from the top three exporters explains why global sugar price pressures remain unrelenting.

Financial Positioning and Market Sentiment

The Commitment of Traders (COT) report revealed a critical dynamic: as of February 3, funds had accumulated a record 239,232 net short positions in NY world sugar futures and options, the largest since 2006. This extreme positioning could theoretically trigger a short-covering rally, though such rebounds would likely prove temporary absent a fundamental shift in supply conditions. For now, sugar price resistance persists.

Medium-Term Outlook and Structural Headwinds

Looking beyond 2025/26, the picture becomes more nuanced. Safras & Mercado predicted on December 23 that Brazil’s production will decline 3.91% to 41.8 MMT in 2026/27, compared to 43.5 MMT for 2025/26. Sugar exports from Brazil are also projected to fall 11% year-over-year to 30 MMT. However, this expected pullback may come too late to prevent further sugar price capitulation in the near term.

The International Sugar Organization (ISO) projected a 1.625 million MT surplus for 2025/26, following a 2.916 million MT deficit in 2024/25. Global production is expected to rise 3.2% to 181.8 million MT in 2025/26, while consumption climbs just 1.4% to 177.921 MMT. The USDA’s December 16 report was even more bearish, anticipating record global production of 189.318 MMT in 2025/26 (up 4.6% year-over-year), with ending stocks declining only marginally to 41.188 MMT.

For India specifically, the USDA’s Foreign Agricultural Service raised its 2025/26 output forecast to 35.25 MMT, a 25% jump attributed to favorable weather and expanded planting. Thailand’s output is projected to reach 10.25 MMT, while Brazil achieves a record 44.7 MMT.

The sugar price environment reflects this surplus reality: abundant supplies from major exporters, record production forecasts, and minimal consumption growth all combine to create sustained headwinds. Until production contractions materialize or demand accelerates meaningfully, sugar price weakness is likely to persist.