Brazil Sugar Production Decline Sets Stage for Global Market Adjustment in 2026/27

Consulting firm Safras & Mercado delivered a significant forecast that’s reshaping market sentiment: Brazil sugar production in 2026/27 will contract by 3.91% to 41.8 MMT from the expected 43.5 MMT in 2025/26. This Brazil sugar production slowdown carries immediate implications for the world’s largest sugar supplier, with the firm projecting the country’s exports to fall 11% year-over-year to 30 MMT. On Monday, March NY world sugar futures closed up 0.09 points (+0.59%), capturing some of this underlying support, while March London ICE white sugar declined 0.60 points (-0.14%), reflecting mixed global sentiment.

Brazil’s Output Contraction: A Turning Point for Global Supply

The anticipated decline in Brazil sugar production in 2026/27 represents a critical inflection point after years of record harvests. Currently, Brazil’s 2025/26 Center-South region has accumulated 39.904 MMT through November, up 1.1% year-over-year, according to Unica’s December 16 report. However, this represents a peak moment before the projected downturn. The ratio of cane crushed specifically for sugar has risen to 51.12% in 2025/26 from 48.34% in 2024/25, yet this elevated processing rate won’t be sustained if production volumes contract as expected.

Brazil’s crop forecasting agency Conab elevated its 2025/26 estimates to 45 MMT on November 4, up from a previous 44.5 MMT projection, but forward-looking analysis points to contraction. The outlook for Brazil sugar production declining represents the first meaningful headwind to supply after multi-year expansion phases, providing some floor under current price levels.

India’s Expanding Output Creates Competing Supply Pressure

While Brazil sugar production faces constraints, India’s growing harvest tells a different story. The India Sugar Mill Association raised its 2025/26 production forecast to 31 MMT on November 11, up 18.8% year-over-year from 30 MMT, following strong October-to-December output of 7.83 MMT (up 28% y/y). More significantly, India’s food secretary announced potential permission for additional exports to manage domestic supply glut, potentially amplifying shipments beyond the previously allowed 1.5 MMT in 2025/26.

The ISMA also revised down its estimate for sugar allocated to ethanol production to 3.4 MMT from an earlier forecast of 5 MMT, freeing up additional volumes for export competition. This supply expansion from India pressures prices even as Brazil sugar production concerns provide some stabilization.

Global Market Surplus Overshadows Regional Disruptions

Despite Brazil sugar production’s projected decline, the International Sugar Organization (ISO) on November 17 forecasted a 1.625 million MT surplus in 2025-26 following the prior year’s 2.916 million MT deficit. ISO projects global sugar production will climb 3.2% year-over-year to 181.8 million MT, driven by expansion in India, Thailand, and Pakistan. Sugar trader Czarnikow boosted its global 2025/26 surplus estimate to 8.7 MMT on November 5, up from 7.5 MMT projected in September.

This expansive global surplus persists because increased production from multiple regions offsets any constraints from Brazil. Thailand, the world’s third-largest producer and second-largest exporter, is projected to boost 2025/26 output by 5% year-over-year to 10.5 MMT according to Thai Sugar Millers Corp’s October 1 projection.

Revised USDA Forecasts Paint Contrasting Picture

The USDA’s December 16 bi-annual report offered the most recent comprehensive assessment, projecting global 2025/26 sugar production at a record 189.318 MMT (+4.6% y/y) and human consumption at record 177.921 MMT (+1.4% y/y). The USDA’s Foreign Agricultural Service predicted Brazil sugar production at 44.7 MMT for 2025/26, representing 2.3% growth—more optimistic than Safras & Mercado’s 2026/27 decline forecast.

The FAS also projected India’s 2025/26 output at 35.25 MMT, up 25% year-over-year, fueled by favorable monsoon rains and expanded acreage. Thailand received a 2% year-over-year production increase estimate to 10.25 MMT. Global ending stocks are forecast to decline 2.9% year-over-year to 41.188 MMT despite the record production, suggesting underlying demand remains reasonably robust even amid surplus conditions.

Market Implications Ahead

The tension between Brazil sugar production contraction expectations for 2026/27 and near-term global surplus conditions defines the current price dynamic. While Monday’s mixed settlement—with New York sugar reaching a 2.25-month high—reflects some carryover support from the Brazil concerns, the broader global context of record production and surplus generation continues to limit upside potential. As market participants digest multiple competing supply narratives, Brazil sugar production remains a focal point for understanding whether global surpluses persist or recede in coming seasons.