Global Sugar Market Faces Downward Pressure as Major Producers Boost Output

The sugar market encountered significant headwinds on Monday as the International Sugar Organization (ISO) unveiled a substantially revised outlook for the 2025-26 season. The organization now projects a 1.625 million MT surplus, marking a dramatic turnaround from its August forecast of a 231,000 MT deficit. This shift reflects mounting production capacity across key exporting regions, with March NY sugar #11 (SBH26) closing down 1.07% and March London ICE white sugar #5 (SWH26) declining 1.81% in response to the updated forecast.

Production Expansion in India Reshapes Market Dynamics

India’s sugar sector is positioned to play a central role in the 2025-26 surplus scenario. The India Sugar Mill Association (ISMA) recently elevated its production estimate to 31 MMT from a prior 30 MMT forecast, representing an 18.8% year-over-year increase from the depressed 2024-25 level of 26.1 MMT. This recovery follows a severe drought that cut output to a five-year low.

A critical development involves India’s export policy adjustment. The country’s food ministry announced it will permit mills to export just 1.5 MMT during the 2025-26 season, down from the previous 2 MMT allocation. Paradoxically, this reduction may prove insufficient to absorb India’s projected output, as abundant monsoon rainfall—recorded at 937.2 mm as of late September, 8% above the five-year average—has created ideal growing conditions. The ISMA simultaneously reduced its ethanol production estimate to 3.4 MMT from 5 MMT, potentially freeing additional supplies for the export market.

Brazil’s Output Reaches Record Levels

Brazil’s role as the world’s largest sugar producer remains a dominant factor in the global supply picture. Conab, the Brazilian government’s crop forecasting agency, raised its 2025-26 production projection to 45 MMT from 44.5 MMT in early November. More granular data from Unica showed that Center-South region output in the second half of October climbed 16.4% year-over-year to 2.068 MMT, while the share of sugarcane crushed for sugar increased to 46.02% from 45.91% in the year-ago period. Through October, cumulative Center-South production reached 38.085 MMT, up 1.6% year-over-year.

The USDA’s Foreign Agricultural Service (FAS) projects Brazilian production will rise 2.3% to a record 44.7 MMT, underscoring the sustained production momentum. This output trajectory has acted as a persistent weight on international sugar prices, with London ICE futures reaching four-year lows last month and New York sugar posting five-year lows this month.

Thailand and Broader Global Supply Trends

Thailand, the world’s third-largest producer and second-largest exporter, contributes meaningfully to the surplus equation. The Thai Sugar Millers Corp projects a 5% increase in output to 10.5 MMT for 2025-26, building on 2024-25 production of 10.00 MMT. The FAS estimates Thai production will reach 10.3 MMT, up 2% year-over-year.

Collectively, these regional expansions drive ISO’s forecast for global production to climb 3.2% year-over-year to 181.8 million MT. The USDA’s May report projected even larger global output at 189.318 MMT, representing a 4.7% year-over-year advance. Against this supply trajectory, global consumption is expected to grow only 1.4%, creating structural pressure on prices. Global ending stocks are projected to rise 7.5% year-over-year to 41.188 MMT.

Market Implications and Price Outlook

The confluence of record or near-record production in major supplying regions, elevated global inventories, and moderate demand growth suggests the sugar market will remain under persistent selling pressure. Private traders have adjusted their assessments accordingly; Czarnikow raised its 2025-26 global surplus estimate to 8.7 MMT in early November, up from a September estimate of 7.5 MMT. This combination of rising output and ample carryover stocks indicates that price recovery faces significant structural headwinds in the near term.