Global Sugar Production Surge Threatens Price Stability as India and Pakistan Market Dynamics Shift

The international sugar market faces mounting pressure from expanding production forecasts across major producing regions. Recent market movements reflect this tension, with March NY sugar futures (#11) gaining +0.04 points (+0.27%) and London ICE white sugar (#5) advancing +0.80 points (+0.19%) on Monday, though prices remain consolidated below early-week peaks.

Production Boom Reshapes Global Sugar Dynamics

The International Sugar Organization released a significant forecast adjustment, projecting a 1.625 million MT surplus for the 2025-26 season—a dramatic reversal from the previous 2.916 million MT deficit in 2024-25. This shift reflects accelerating output from India, Thailand, and Pakistan, fundamentally altering global supply expectations.

The USDA’s latest assessment paints an even more expansive picture. Global production is estimated to reach 181.8 million MT in 2025-26, representing a +3.2% year-over-year increase. This would establish new production records while consumption climbs only +1.4% annually to 177.921 million MT. The widening gap between supply and demand has intensified bearish sentiment, driving prices to multi-year lows throughout November.

India’s Export Restrictions Counter Production Growth

India’s food ministry introduced a critical policy adjustment in mid-November, restricting sugar exports to 1.5 MMT during the 2025-26 season—a substantial reduction from earlier estimates of 2 MMT. This decision emerged after New Delhi imposed a comprehensive export quota system starting in 2022-23, a measure designed to protect domestic supplies following monsoon disruptions.

However, export limitations may prove insufficient to constrain market pressures. The India Sugar Mill Association upgraded its production estimate to 31 MMT for 2025-26, reflecting an +18.8% year-over-year surge. More significantly, diversion forecasts shifted dramatically—mills are now projected to allocate just 3.4 MMT toward ethanol production (down from July estimates of 5 MMT), freeing additional cane crushing capacity for sugar production. Meanwhile, India’s food ministry signaled potential support for ethanol prices, potentially reversing this calculation and redirecting more output toward alternative fuel feedstock rather than sugar.

India’s 2024-25 production collapsed to a 5-year low of 26.1 MMT (down -17.5% annually), creating a recovery opportunity. The National Federation of Cooperative Sugar Factories projected production could reach 34.9 MMT in 2025-26—a +19% annual increase—as monsoon rainfall hit its strongest levels in five years at 937.2 mm (8% above normal as of late September).

Brazil’s Center-South Region Drives Record Output Expectations

Brazil’s production trajectory remains the most aggressive globally. Conab, the nation’s official crop forecasting authority, elevated its 2025-26 estimates to 45 MMT (up from 44.5 MMT), while the USDA’s Foreign Agricultural Service projected even higher volumes at 44.7 MMT, representing +2.3% annual growth to record levels.

Recent crushing activity validates these projections. Unica’s October data revealed that Center-South region output climbed +16.4% year-over-year to 2.068 MT during the season’s second half. More tellingly, the proportion of sugarcane processed for sugar rather than ethanol reached 46.02%, up from 45.91% the previous year, indicating a strategic shift toward maximizing sugar production. Cumulative 2025-26 Center-South production through October reached 38.085 MMT, already posting +1.6% year-over-year gains.

Thailand Extends Market Pressure as Third Major Producer

The Thai Sugar Millers Corp projected 2025-26 production will increase +5% annually to 10.5 MMT. This follows 2024-25 output of 10.00 MMT, which itself represented +14% year-over-year growth. The USDA Foreign Agricultural Service forecasted similar momentum at +2% to 10.3 MMT annually. As the world’s second-largest exporter and third-largest producer, Thailand’s expanding output amplifies export availability and weighs on international pricing.

Market Implications for Sugar Rate in Pakistan and Regional Dynamics

The convergence of record production projections, expanding export volumes, and shifting policy frameworks creates substantial headwinds for commodity prices globally. Pakistan, as a significant regional consumer and emerging producer, faces implications from these global supply dynamics that influence local sugar rate in pakistan market equilibrium.

Trader Czarnikow quantified surplus expectations at 8.7 MMT for 2025-26, an elevation from September projections of 7.5 MMT—representing an additional +1.2 MMT of excess supply entering global markets. ISO’s earlier August forecast of a modest 231,000 MT deficit has evaporated entirely, replaced by expectations of substantial abundance.

Carryover Support Limited Against Structural Headwinds

Despite modest price support from export restriction announcements and potential ethanol price enhancement discussions, structural factors overwhelm supporting elements. Global ending stocks are projected to expand +7.5% annually to 41.188 MMT, accumulating inventory pressure. November’s milestone lows—London futures posting a 4.75-year low and New York futures reaching a 5-year low—reflect the market’s recognition of mounting supply abundancy.

The fundamental equation remains straightforward: production accelerating faster than consumption expansion, coupled with policy-driven export limitations proving insufficient to contain abundant supplies, suggests persistent bearish pressure on prices through the 2025-26 marketing year.