Global Sugar Surplus Reaches Ample Levels, Dragging Prices to Multi-Year Lows

Sugar markets experienced significant selling pressure recently, with March New York futures (SBH26) declining 0.02 cents (-0.14%) and March London white sugar (SWH26) falling 1.60 cents (-0.39%). The deeper story behind these price movements reflects ample global supplies that continue to weigh heavily on the market. New York sugar has retreated to a 2.5-month low, while London sugar tumbled to a 5-year low—reflecting the fundamental shift toward excess inventory on a global scale.

The bearish backdrop stems from widespread expectations of substantial global sugar surpluses. Multiple commodity analysts have projected oversupply conditions for the 2025/26 season. Green Pool Commodity Specialists forecast a 2.74 million metric tons (MMT) surplus, while StoneX projected 2.9 MMT. Meanwhile, Czarnikow issued an even more aggressive estimate of 8.7 MMT surplus. These ample supply projections have become the dominant force shaping price direction across both futures markets.

Record Production and Ample Global Supplies Fuel Price Decline

The roots of this surplus trace back to record or near-record production across multiple origins. Brazil’s Center-South region is on track for robust output, with cumulative 2025-26 production through December reaching 40.222 MMT—up 0.9% year-over-year. More significantly, Brazilian producers are dedicating a higher proportion of cane to sugar production, with the sugar-to-ethanol ratio rising to 50.82% in 2025-26 from 48.16% the prior year.

India, the world’s second-largest sugar producer, is experiencing a particularly strong harvest. The India Sugar Mill Association (ISMA) reported that early-season output through mid-January reached 15.9 MMT, up 22% year-over-year. Looking at full-year prospects, ISMA raised its 2025/26 production forecast to 31 MMT (up 18.8% y/y), supported by favorable monsoon conditions and expanded acreage.

Thailand, the world’s third-largest producer and second-largest exporter, is also contributing to the ample global inventory picture. The Thai Sugar Millers Corp projected a 5% increase in the 2025/26 crop to 10.5 MMT. When combined with rising output from Pakistan and other secondary producers, these flows create genuine oversupply conditions that are difficult for prices to overcome.

India’s Abundant Output and Export Surge Add to Global Oversupply

A particularly challenging dynamic for prices emerges from India’s policy shift on exports. The government has signaled willingness to allow additional sugar exports to work down domestic supply gluts. In November, India’s food ministry approved exports of 1.5 MMT for the 2025/26 season—a meaningful volume that floods already-ample global markets. This represents a notable change from the export quota system India implemented in 2022/23, when late rains and tight domestic supplies required protective measures.

The ISMA simultaneously reduced its estimate for sugar destined for ethanol production from 5 MMT to 3.4 MMT, freeing up additional volumes for export. This policy combination—higher production, lower ethanol demand, and government approval for sales abroad—creates powerful headwinds for prices as Indian sugar competes aggressively in global markets.

Market Forecasts Point to Continued Pressure from Supply Surplus

Official forecasting agencies have aligned their views around oversupply for the current crop year. The International Sugar Organization (ISO) estimated a 1.625 MMT surplus for 2025-26, up from a 2.916 MMT deficit the prior year. ISO also projects that global sugar production will rise 3.2% year-over-year to 181.8 MMT, while the U.S. Department of Agriculture (USDA) is even more bullish—forecasting production at a record 189.318 MMT with a 4.6% year-over-year increase.

The USDA’s more aggressive production outlook reflects expectations for Brazil to reach record output of 44.7 MMT and India to surge 25% to 35.25 MMT. The USDA also projects Thailand at 10.25 MMT. Against this backdrop of ample production, global human consumption is projected to increase just 1.4% to a record 177.921 MMT, leaving substantial excess supplies to pressure prices.

Looking ahead to 2026/27, some stabilization may emerge. Safras & Mercado expects Brazil’s production to decline 3.91% to 41.8 MMT, with exports falling 11% to 30 MMT. Covrig Analytics projected the 2026/27 global surplus will shrink to 1.4 MMT—a notable decrease from current-year levels. These forecasts suggest that while ample supplies dominate the near-term outlook, the tightening later could ultimately provide price support. For now, however, the combination of record output and abundant global inventories remains the primary driver keeping sugar prices under sustained pressure.