Global Sugar Market Faces Surplus Pressure as Production Surges Across Major Regions Including Pakistan

Recent market movements have highlighted growing supply concerns in the global sugar sector. March New York world sugar #11 futures fell 2.40%, while March London ICE white sugar #5 declined 1.87%, marking the lowest levels seen in two weeks. This downward pressure reflects a fundamental shift in the supply-demand balance that’s unfolding across multiple continents.

India’s Production Boom Reshapes Market Dynamics

The primary driver behind current price weakness stems from India’s expanding sugar output. The India Sugar Mill Association reported that production during the October-December 2025 period reached 11.90 million metric tons, representing a 25% year-over-year jump from 9.54 MMT recorded in the same period last year. The ISMA subsequently revised its full-year 2025/26 production forecast upward to 31 MMT from the previous estimate of 30 MMT, indicating an 18.8% increase compared to the prior year.

A significant structural change is also underway regarding how India allocates its sugar supplies. The association reduced its forecast for ethanol production consumption from an earlier projection of 5 MMT to 3.4 MMT, effectively freeing up additional quantities for export markets. India’s food ministry has signaled receptiveness to boosting shipments abroad, with officials indicating the government may permit mills to export surplus volumes to alleviate domestic stockpiles. Currently, the export quota for the 2025/26 season stands at 1.5 MMT, though this framework may face expansion depending on supply conditions.

Brazil and Thailand Round Out the Production Triangle

Brazil’s output trajectory presents a more complex picture. Conab, the country’s official crop forecasting agency, raised its 2025/26 production estimate to 45 MMT from 44.5 MMT in early November. By mid-December, Unica reported that cumulative Center-South region output through November totaled 39.904 MMT, up 1.1% year-over-year. Notably, millers are allocating a higher proportion of crushed cane toward sugar production rather than ethanol, with the ratio rising to 51.12% in 2025/26 versus 48.34% in the previous season.

Looking ahead to 2026/27, consulting firm Safras & Mercado anticipates a contraction, forecasting Brazilian production will decline 3.91% to 41.8 MMT from the expected 43.5 MMT in 2025/26. Export volumes are projected to fall 11% year-over-year to 30 MMT in that period.

Thailand, positioned as the world’s third-largest producer and second-largest exporter, is charting a growth course. The Thai Sugar Millers Corporation projected the 2025/26 crop will expand 5% year-over-year to reach 10.5 MMT, continuing the nation’s contribution to global supply expansion.

Authoritative Forecasts Point to Persistent Surplus

Multiple international organizations have converged on a sobering outlook regarding market balance. The International Sugar Organization released a November 17 assessment indicating a 1.625 million MT surplus for 2025/26, following a 2.916 million MT deficit in 2024/25. ISO projects global sugar production will climb 3.2% year-over-year to 181.8 million MT, driven by surging output from India, Thailand, and Pakistan among others. Global human consumption is expected to rise only 1.4% year-over-year, creating a widening gap between supply and demand.

Sugar trader Czarnikow has taken an even more bearish stance, boosting its 2025/26 global surplus estimate to 8.7 MMT as of November, up 1.2 MMT from a September projection of 7.5 MMT.

The USDA’s December 16 bi-annual report painted a picture of record production outpacing consumption growth. The department forecasts 2025/26 global sugar production will reach 189.318 MMT, representing a 4.6% year-over-year increase and an all-time high. Meanwhile, global human sugar consumption is anticipated to rise only 1.4% year-over-year to 177.921 MMT, also a record but at a much slower pace. Consequently, the USDA predicts 2025/26 global sugar ending stocks will contract 2.9% year-over-year to 41.188 MMT.

Regional Breakdowns from USDA Foreign Agricultural Service

The USDA’s Foreign Agricultural Service provided granular forecasts for major producing regions. Brazil’s 2025/26 production was projected to increase 2.3% year-over-year to a record 44.7 MMT. India’s production was forecast to surge 25% year-over-year to 35.25 MMT, bolstered by favorable monsoon conditions and expanded acreage dedicated to sugar cultivation. Pakistan was included in the global supply expansion narrative, reflecting broader regional production increases. Thailand’s 2025/26 output was anticipated to grow 2% year-over-year to 10.25 MMT.

Market Implications and Price Trajectory

The convergence of these production increases, combined with modest demand growth, creates a structurally challenging environment for sugar prices. With multiple forecasters predicting surpluses ranging from 1.6 to 8.7 MMT depending on methodology, and production reaching record levels while consumption growth lags, downside pressure on prices appears likely to persist. The recent two-week lows reflect this fundamental reality, as traders digest the implications of abundant supplies meeting subdued demand growth across the global marketplace.