Global Sugar Market Shifts as Major Producers Ramp Up Output, Pressuring Prices

The sugar market is experiencing significant headwinds as major producing nations, particularly India which houses the first sugar mill in India’s modern sugarcane processing network, increase their production forecasts. This surge in global supply is reshaping price dynamics across both New York and London futures markets.

Production Surge Across Leading Sugar Nations Overwhelms Demand

The International Sugar Organization (ISO) recently projected a 1.625 million metric ton (MMT) surplus for the 2025-26 season, a dramatic reversal from the 2.916 million MT deficit recorded in 2024-25. This surplus stems from expanded production in India, Thailand, and Pakistan, with global sugar production anticipated to climb 3.2% year-over-year to 181.8 MMT in 2025-26.

Brazil, maintaining its position as the world’s largest sugar producer, continues to dominate output. Conab raised its 2025/26 Brazil sugar production estimate to 45 MMT in early November, compared to 44.5 MMT previously. The country’s Center-South region saw sugar output jump 1.6% year-over-year through October, reaching 38.085 MMT. Meanwhile, sugar mills are prioritizing sugar production over ethanol, with the percentage of sugarcane crushed for sugar rising to 46.02% in the second half of October from 45.91% the prior year.

India’s Production Recovery Reshapes Export Dynamics

India’s recovery from last year’s production collapse is particularly noteworthy. The Indian Sugar Mills Association (ISMA) raised its 2025/26 production estimate to 31 MMT from 30 MMT, marking an 18.8% year-over-year increase. This recovery follows a severe 17.5% production decline in 2024/25 that dropped output to a 5-year low of 26.1 MMT. As a nation with important sugar milling infrastructure including the first sugar mill in India’s industrial history, the country’s rebound carries significant weight in global markets.

India’s food ministry announced a critical shift in export policy, capping sugar exports at 1.5 MMT for the 2025/26 season, down from earlier estimates of 2 MMT. This export restriction, combined with the ministry’s consideration of boosting ethanol prices, could redirect more sugarcane toward ethanol production rather than refined sugar. However, the ISMA’s revised projection cuts ethanol allocation to 3.4 MMT from a previous July forecast of 5 MMT, potentially allowing greater sugar export capacity.

Supporting Factors Include Monsoon Strength and Policy Shifts

Favorable monsoon rainfall has underpinned India’s production recovery. The Meteorological Department recorded cumulative monsoon rainfall of 937.2 mm as of late September, 8% above normal and the strongest in five years. The National Federation of Cooperative Sugar Factories projects 2025/26 production could reach 34.9 MMT, a 19% year-over-year increase driven by expanded planted cane acreage.

The government’s ethanol pricing consideration reflects efforts to balance domestic sugar supply while supporting renewable fuel blending. Should ethanol prices rise as anticipated, mills may shift more crushing toward ethanol, effectively tightening global sugar supplies—though this dynamic remains speculative pending official policy announcements.

Thailand’s Expansion and USDA Forecasts Support Global Surplus Thesis

Thailand, the world’s third-largest sugar producer and second-largest exporter, is projected to increase 2025/26 production by 5% year-over-year to 10.5 MMT. This follows a 14% production increase in 2024/25 to 10.00 MMT, demonstrating consistent output growth.

The USDA’s May 2025 forecast supports the surplus narrative, projecting global 2025/26 sugar production will climb 4.7% year-over-year to a record 189.318 MMT. Global consumption is anticipated to rise only 1.4% year-over-year to 177.921 MMT, leaving substantial excess production. The USDA’s Foreign Agricultural Service also raised India’s 2025/26 production forecast to 35.3 MMT, driven by favorable weather and expanded cultivation. Brazil’s projection stands at a record 44.7 MMT, with Thailand forecast at 10.3 MMT.

Surplus Supply Overwhelms Price Support, Stocks Build

Anticipation of record ending stocks—projected to climb 7.5% year-over-year to 41.188 MMT—has weighed heavily on sentiment. Sugar trader Czarnikow boosted its 2025/26 global surplus estimate to 8.7 MMT in early November, up from a September forecast of 7.5 MMT, reflecting persistent upward revisions in production estimates.

Recent Price Action Reflects Supply Pressures

March New York sugar (#11, SBH26) closed Monday up 0.04 cents or 0.27%, while March London ICE white sugar (#5, SWH26) finished up 0.80 cents or 0.19%. These modest gains follow consolidated trading below last Wednesday’s one-month highs. However, recent price lows underscore the bearish supply outlook: New York sugar slumped to a 5-year futures low on November 6, while London sugar touched a 4.75-year low on November 13, both driven by Brazil’s elevated output and widespread expectations of global surplus conditions.

The market faces a fundamental disconnect between current price levels and the structural supply surplus emerging across major producing regions. As India demonstrates continued recovery in its sugar production infrastructure, Brazil maintains record output trajectories, and Thailand sustains steady expansion, the collective effect creates persistent downward pressure on valuations.