Record Global Sugar Output Undercuts Market as Production Surges Across Top Producers

Sugar futures retreated to their lowest point in a week, with March NY world sugar #11 (SBH26) declining 0.22 points or 1.48%, and March London ICE white sugar #5 (SWH26) sinking 6.10 points or 1.43%. The downward pressure reflects mounting concerns over a global supply surplus that continues to build momentum.

Brazil’s Expanded Output Weighs Heavily on Prices

Brazil’s sugar sector is amplifying bearish sentiment through record production volumes. According to Unica’s report released Tuesday, Brazil’s cumulative 2025-26 Center-South sugar output through mid-December climbed 0.9% year-over-year to reach 40.158 MMT. More significantly, the ratio of cane processed for sugar production expanded to 50.91% in 2025-26 compared to 48.19% in 2024-25, demonstrating a strategic shift toward maximizing sugar yields.

Currency weakness is further incentivizing Brazilian sugar exports. The Brazilian real plunged to a one-week low against the dollar, motivating local producers to accelerate sales abroad at current price levels. This dynamic undercuts market stability and encourages additional supply pressure.

Conab, Brazil’s agricultural forecasting agency, had previously raised its 2025-26 production estimate to 45 MMT on November 4, signaling confidence in record harvest expectations. The USDA’s Foreign Agricultural Service similarly projects Brazilian output will rise 2.3% year-over-year to 44.7 MMT for the 2025-26 season.

India and Thailand Emerge as Secondary Supply Drivers

India’s sugar output trajectory presents another challenge to price stability. The India Sugar Mill Association reported a 25% year-over-year jump in production during October-December 2025-26, reaching 11.90 MMT compared to 9.54 MMT in the prior year period. The ISMA increased its full-season 2025-26 forecast to 31 MMT in November, up 18.8% annually.

Notably, India has reduced its ethanol allocation to 3.4 MMT from a July projection of 5 MMT, freeing up additional sugar for export markets. The USDA projects Indian production could surge to 35.25 MMT, driven by favorable monsoon conditions and expanded cultivation. India’s food ministry authorized mills to export 1.5 MMT during 2025-26, supporting the country’s objective to work through domestic inventory oversupply.

Thailand’s contribution rounds out the trifecta of expanding production. The Thai Sugar Millers Corp forecasts 2025-26 output will grow 5% year-over-year to 10.5 MMT, while the USDA estimates 10.25 MMT. As the world’s third-largest producer and second-largest exporter, Thailand’s increased volumes significantly undercut global price recovery prospects.

Global Market Surplus Overwhelms Demand Growth

The confluence of expanded production across major origins has generated forecasts for substantial global sugar surpluses. The International Sugar Organization projected a 1.625 million MT surplus for 2025-26 following a 2.916 million MT deficit in 2024-25, attributing the swing to higher output in India, Thailand, and Pakistan.

Czarnikow raised its 2025-26 global surplus estimate to 8.7 MMT in November, up 1.2 MMT from September projections. Covrig Analytics similarly elevated its surplus forecast to 4.7 MMT from 4.1 MMT, though it anticipates contraction to 1.4 MMT in 2026-27 as weak pricing discourages future planting.

The USDA’s December biannual report projected global 2025-26 production would climb 4.6% year-over-year to a record 189.318 MMT, while human consumption would increase just 1.4% annually to 177.921 MMT. Global ending stocks are forecast to decline 2.9% to 41.188 MMT, yet the production-to-consumption imbalance remains pronounced.

Forward Outlook

While current conditions clearly undercuts pricing power, medium-term supply dynamics may stabilize. Safras & Mercado projected Brazil’s 2026-27 production would retreat 3.91% to 41.8 MMT from the expected 43.5 MMT in 2025-26, with exports declining 11% annually to 30 MMT. If weak prices discourage production expansion globally, subsequent supply tightening could eventually support price recovery.