Global Sugar Market Faces Mounting Supply Pressure Despite Recent Price Rally

Short-Term Bounce Masks Deeper Bearish Fundamentals

Sugar futures staged a notable recovery on Wednesday, with March NY world sugar #11 closing up +0.23 points (+1.54%) and March London ICE white sugar #5 gaining +5.70 points (+1.33%), climbing to 5-week highs. The immediate trigger came from StoneX’s downward revision of Brazil’s 2026/27 Center-South sugar production, now estimated at 41.5 MMT versus September’s forecast of 42.1 MMT. Additionally, India’s food ministry’s consideration of higher ethanol prices could incentivize local mills to redirect sugarcane crushing toward biofuel production rather than sugar, potentially tightening supplies. India’s earlier decision to cap sugar exports at 1.5 MMT for the 2025/26 season (down from 2 MMT) also provided temporary price support.

The Structural Bearish Case: Record Global Production Ahead

However, beneath these near-term bullish signals lies a more compelling bearish thesis. The International Sugar Organization (ISO) forecasts a 1.625 million MT surplus in 2025-26 following a 2.916 million MT deficit in 2024-25—a dramatic swing that contradicts earlier August projections of only a 231,000 MT deficit. ISO anticipates global sugar production will surge +3.2% year-over-year to 181.8 million MT, with India, Thailand, and Pakistan driving expansion.

This structural oversupply has already punished prices since early October. London sugar hit a 4.75-year low on November 13, while NY sugar slumped to a 5-year nearest-futures low by November 6, reflecting market anxieties about a potential glut.

Brazil: The Supply Elephant in the Room

Brazil’s sugar sector continues to confound bearish sentiment. Conab, Brazil’s official crop forecasting agency, raised its 2025/26 production estimate to 45 MMT from 44.5 MMT on November 4. More granularly, Unica reported that Center-South sugar output in October’s second half surged +16.4% year-over-year to 2.068 MT, while the percentage of cane crushed for sugar (versus ethanol) rose to 46.02% from 45.91% annually. Cumulative 2025-26 Center-South production through October climbed +1.6% year-over-year to 38.085 MMT.

The USDA’s Foreign Agricultural Service projects Brazil’s 2025/26 sugar production will climb +2.3% year-over-year to a record 44.7 MMT, keeping downward pressure on global prices.

India’s Recovery Erodes Export Scarcity Premium

India’s sugar rebound compounds supply concerns. The India Sugar Mill Association (ISMA) raised its 2025/26 production estimate to 31 MMT on November 11 from 30 MMT—a +18.8% year-over-year increase. More importantly, ISMA cut its ethanol-use forecast to 3.4 MMT (from 5 MMT in July), freeing more cane for export, while the National Federation of Cooperative Sugar Factories projects production could reach 34.9 MMT (+19% y/y).

This represents a dramatic turnaround from 2024/25’s 5-year low of 26.1 MMT. Abundant monsoon rains—937.2 mm as of late September, 8% above normal and the strongest in five years—should support a bumper 2025/26 harvest. The USDA’s FAS forecasts India’s 2025/26 output at 35.3 MMT (+25% y/y).

Thailand’s Third-Largest Position Adds to Glut Risk

Thailand, the world’s third-largest producer and second-largest exporter, is also ramping production. The Thai Sugar Millers Corp projects 2025/26 output will increase +5% year-over-year to 10.5 MMT, building on 2024/25’s +14% year-over-year surge to 10.00 MMT. The USDA-FAS forecasts Thailand’s 2025/26 production at 10.3 MMT (+2% y/y).

Mega Surplus Forecasts vs. Consumption Growth

Sugar trader Czarnikow dramatically raised its 2025/26 global surplus estimate to 8.7 MMT on November 5, up +1.2 MMT from September’s 7.5 MMT. Meanwhile, the USDA projects global 2025/26 sugar production will climb +4.7% year-over-year to a record 189.318 MMT, while consumption rises only +1.4% year-over-year to 177.921 MMT. Global ending stocks are forecast to climb +7.5% year-over-year to 41.188 MMT.

The London Coffee Futures Market Parallel

For context, commodity futures markets like London coffee have similarly struggled with supply gluts despite occasional tactical bounces. Just as coffee oversupply has capped rallies despite weather concerns, sugar’s structural surplus appears destined to override isolated production cuts or policy shifts.

Bottom Line

While Wednesday’s price bounce reflects genuine supply concerns from Brazil and India’s policy moves, the medium-term trajectory for sugar appears decidedly bearish. With global production set to climb to record levels and consumption growing at a tortoise’s pace, the sugar market faces an uphill battle against mounting inventories and the economic reality of abundant supplies outpacing demand growth through 2025/26.