Global Sugar Stocks Face Mounting Pressure as Major Producers Ramp Up Output

The global sugar market is navigating a complex landscape where near-term price volatility masks a deeper challenge: the accumulation of sugar stocks worldwide. Recent developments in currency markets, fund positioning, and production trends are reshaping the outlook for supply dynamics and inventory levels throughout 2025 and 2026.

Brazilian Real Strength Weighs on Export Interest

March NY world sugar #11 closed up +0.10 (+0.69%) on Tuesday, while May London ICE white sugar #5 finished down -1.00 (-0.24%), reflecting the mixed signals currently gripping the commodity. The underlying driver of near-term support is the Brazilian real’s performance against the dollar. The real surged +0.31% on Tuesday, hovering just below a 1.75-year high, a dynamic that directly impacts Brazil’s sugar export calculations. When the real strengthens, it makes Brazilian sugar less competitive on international markets, discouraging exporters from aggressive selling and potentially tightening near-term supply—a factor lending temporary support to prices.

However, this near-term support masks a troubling reality for sugar stocks globally. While the Brazilian real’s strength briefly supports prices, the underlying trend points toward a structural buildup in global inventory levels as major producing regions accelerate output.

Excessive Fund Short Positions Set Stage for Rally

Market positioning data reveals another layer of complexity affecting sugar stocks. The latest Commitment of Traders (COT) report showed that funds elevated their short position in NY sugar futures and options by 14,381 contracts in the week ended February 17, reaching a record high of 265,324 net short positions based on data stretching back to 2006. This extreme bearish positioning creates potential for sharp short-covering rallies, though it underscores prevailing pessimism about the supply-demand balance and inventory accumulation risks.

The 5.25-year low touched on February 12 reflected widespread concerns that global sugar stocks will remain elevated amid persistent surplus conditions. Yet extreme positioning can reverse quickly, making tactical rebounds possible even as the fundamental backdrop deteriorates.

Rising Production in Brazil, India, and Thailand Tests Sugar Stocks

Production trends across the world’s three largest sugar producers paint a picture of expanding output that will inevitably flow into sugar stocks. Brazil’s Center-South region, which represents the bulk of the country’s sugar production, saw output in the second half of January fall 36% year-over-year to 5,000 MT—a concerning near-term decline. However, cumulative 2025-26 Center-South production through January is up +0.9% year-over-year to 40.24 MMT, and the ratio of cane crushed for sugar rose to 50.74% in the 2025/26 season from 48.14% in 2024/25, signaling an intent to prioritize sugar production going forward.

India, the world’s second-largest producer, is experiencing a production boom. The India Sugar Mill Association (ISMA) reported that India’s 2025-26 sugar output from October 1 through January 15 reached 15.9 MMT, up +22% year-over-year. The ISMA raised its full-year 2025/26 estimate to 31 MMT in November—up 18.8% year-over-year—boosted by India’s strongest monsoon season in five years. More significantly, the ISMA cut its estimate for sugar used for ethanol production to 3.4 MMT from a prior July forecast of 5 MMT, potentially freeing up an additional 1.6 MMT for export and adding to global sugar stocks.

Reflecting this production surge, India’s government approved an additional 500,000 MT of sugar for export in February, on top of the 1.5 MMT quota authorized in November. This policy shift, driven by robust production, will meaningfully increase India’s export supply flowing into global sugar stocks.

Thailand, the world’s third-largest producer and second-largest exporter, is also expanding output. The Thai Sugar Millers Corp projected that Thailand’s 2025/26 sugar crop will increase +5% year-over-year to 10.5 MMT, adding to global inventory pressures.

Surplus Forecasts Point to Sustained Pressure on Sugar Stocks

The fundamental outlook for global sugar stocks is defined by widespread surplus forecasts from multiple authoritative sources. The International Sugar Organization (ISO) on November 17 projected a 1.625 million MT sugar surplus in 2025-26, following a 2.916 million MT deficit in 2024-25. ISO attributed the swing to increased production in India, Thailand, and Pakistan, and forecasted global sugar production rising +3.2% year-over-year to 181.8 million MT in 2025-26.

Sugar trader Czarnikow’s November analysis was even more bearish, boosting its 2025/26 global surplus estimate to 8.7 MMT (up +1.2 MMT from a September forecast of 7.5 MMT). Czarnikow further expects a 3.4 MMT global surplus in the 2026/27 crop year. Other analysts, including Green Pool Commodity Specialists (2.74 MMT surplus for 2025/26) and StoneX (2.9 MMT surplus for 2025/26), project similar dynamics.

The USDA’s bi-annual report released in December quantified these trends, projecting that global 2025/26 sugar production would climb +4.6% year-over-year to a record 189.318 MMT, while global consumption would increase only +1.4% year-over-year to 177.921 MMT. The critical metric for sugar stocks is the ending inventory forecast: USDA projected 2025/26 global sugar ending stocks would fall -2.9% year-over-year to 41.188 MMT—a modest decline that masks substantial regional differences and accumulation risks.

The USDA’s Foreign Agricultural Service (FAS) painted a picture of persistent pressure on sugar stocks, predicting Brazil’s 2025/26 production would rise +2.3% year-over-year to a record 44.7 MMT, while India’s output would surge +25% year-over-year to 35.25 MMT. Consulting firm Safras & Mercado added that Brazil’s sugar exports in 2026/27 are expected to fall -11% year-over-year to 30 MMT despite rising production, suggesting sugar stocks will need to absorb this output before export normalization occurs.

The convergence of production increases across all major regions points to a structural challenge: global sugar stocks will face mounting pressure throughout 2025 and into 2026 regardless of near-term price rallies or currency fluctuations. While Brazilian real strength and extreme fund short positioning may generate tactical support, the fundamental backdrop of rising output and persistent surplus forecasts suggests that sugar stocks will remain a key headwind for prices over the medium term.