Global Sugar Prices Decline: What It Means for Pakistan's Market

The world sugar market is experiencing significant downward pressure as major producing nations report sharply higher output. In early trading, the New York March contract fell 0.12 points to close 0.81% lower, while London’s white sugar contract declined 0.24%. For Pakistan and other emerging economies dependent on sugar imports, these global price movements carry important implications for both consumption and production costs. Understanding the drivers behind the current sugar price weakness is critical for stakeholders across South Asian markets, particularly in Pakistan where sugar plays a vital economic role.

Rising Production Across Major Sugar-Growing Nations

Global sugar supply is expanding at an unprecedented rate, with forecasters revising production estimates upward repeatedly throughout the year. The U.S. Department of Agriculture projected that global 2025-26 sugar production will climb 4.6% year-over-year to reach a record 189.318 million metric tons, while consumption is expected to grow by only 1.4% to 177.921 million metric tons. This supply-demand imbalance is the fundamental driver weighing on sugar prices worldwide.

The expansion in production is not concentrated in a single region but rather spread across multiple continents. Brazil, which produces roughly one-quarter of the world’s sugar, reported its cumulative 2025-26 Center-South output rose 0.9% year-over-year to 40.222 million metric tons. More significantly, Brazilian mills are diverting a higher share of their sugarcane crush toward sugar rather than ethanol, with the sugar allocation rising to 50.82% from 48.16% in the prior season. Brazil’s official crop forecasting agency lifted its full-season estimate to 45 million metric tons, reflecting expectations for record output during the 2025-26 period.

India’s Export Surge and Its Impact on Global Sugar Pricing

India, the world’s second-largest sugar producer, emerged as a critical variable in the 2025-26 market dynamics. The India Sugar Mill Association reported that output through mid-January of the 2025-26 season reached 15.9 million metric tons, up 22% year-over-year. The association subsequently raised its full-year production estimate to 31 million metric tons, reflecting an 18.8% increase from the prior year. This surge is attributed to favorable monsoon rains and increased planting acreage.

More significantly for global pricing, India’s government signaled its intention to boost sugar exports to manage domestic oversupply. The food ministry approved export quotas of 1.5 million metric tons for the 2025-26 season, and officials suggested additional export volumes might be permitted. India introduced quota restrictions back in 2022-23 following production shortfalls, so the recent pivot toward permitting greater exports represents a major shift in policy. With India accounting for a substantial portion of international sugar trade, this export increase is actively suppressing prices across global markets, directly affecting import-dependent economies like Pakistan.

Brazil’s Production Boom: A Weight on Sugar Prices

Beyond India’s contribution to global supply growth, Brazil’s production trajectory adds additional pressure. Brazilian crop experts project that the 2025-26 season will yield approximately 45 million metric tons, but they simultaneously forecast that production will retreat in the 2026-27 season. Consulting firm Safras & Mercado projected a 3.91% decline to 41.8 million metric tons in 2026-27, with export volumes expected to fall 11% year-over-year to 30 million metric tons. This anticipated pullback in subsequent seasons suggests that current price weakness may prove temporary.

Thailand, the world’s third-largest producer and second-largest exporter, adds another dimension to the production outlook. The Thai Sugar Millers Corporation projected a 5% year-over-year increase in its 2025-26 crop to 10.5 million metric tons. Combined with forecasts showing Thailand’s 2025-26 output rising 2% to 10.25 million metric tons, the region’s contribution to global supply expansion remains substantial.

The Surplus Problem Facing Sugar Markets

Multiple forecasting organizations have quantified the scale of global oversupply. The International Sugar Organization reported that the 2025-26 season is expected to produce a 1.625 million metric ton surplus, reversing a 2.916 million metric ton deficit recorded in 2024-25. The organization attributed the swing to accelerated production growth in India, Thailand, and Pakistan itself. Covrig Analytics raised its 2025-26 global surplus estimate to 4.7 million metric tons, while sugar trader Czarnikow boosted its estimate to 8.7 million metric tons.

These varying surplus projections underscore the uncertainty facing the market, but the directional message is clear: supply substantially exceeds consumption growth. This imbalance mechanically suppresses prices. The USDA anticipated that global sugar ending stocks will fall 2.9% year-over-year to 41.188 million metric tons, suggesting that even with rising production, inventory pressure remains contained.

What Lower Sugar Prices Mean for Pakistan’s Economy

For Pakistan, the world’s fifth-largest sugar producer and a significant importer of refined sugar, the current price environment presents a mixed picture. Lower global prices reduce acquisition costs for Pakistani refiners importing raw sugar, potentially lowering consumer prices domestically. However, Pakistani sugar mills face margin compression as selling prices decline faster than input costs adjust. The country’s sugar industry, which generates substantial export revenue and employment, operates within this complex global context where prices are determined far from South Asian markets.

Pakistan’s position as both a producer and importer means that sugar price movements in Brazil, India, and Thailand directly impact the country’s sugar economy. The expected 4.6% surge in global production will continue exerting downside pressure on prices throughout the 2025-26 season, with potential relief not anticipated until the 2026-27 season when Brazilian production is projected to decline.

Market Outlook: When Will Sugar Prices Stabilize

The near-term outlook for sugar prices remains under pressure from the combination of rising global production and increasing export availability from India. Analysts anticipate that this surplus environment will persist throughout the current season, keeping downward pressure on sugar prices across all markets, including Pakistan’s.

However, forecasters project a material shift beginning in 2026-27. Covrig Analytics expects the global surplus to narrow dramatically to 1.4 million metric tons as higher production costs and weak prices discourage new planting and processing capacity expansion. Brazil’s anticipated production decline of nearly 4% will remove a significant source of global supply. These factors suggest that the current period of price weakness may represent a cyclical low before supply-demand dynamics rebalance in the following season.

For Pakistani stakeholders, the current environment of lower sugar prices offers a window for refiners to improve cost positions, but the temporary nature of this advantage underscores the importance of understanding global supply dynamics and planning accordingly as the market transitions toward tighter conditions in subsequent years.