Sugar Price Weakness Intensifies as Major Producers Expand Output

The downward pressure on sugar price extended this week, with trading in both New York and London markets marking significant declines. NY world sugar #11 futures fell -0.07 cents, dropping -0.48% on the session, while London ICE white sugar #5 contracts slid -1.40 cents or -0.33%. Both markers hit multi-week lows, signaling that supply concerns are outweighing any potential demand recovery in the near term.

India Sugar Production Surge Weighs on Sugar Price Outlook

The primary driver behind recent weakness in sugar price stems from expanding Indian production. The National Federation of Cooperative Sugar Factories Ltd., representing India’s cooperative mill sector, reported that cumulative sugar output for the 2025/26 season reached 15.9 million metric tons (MMT) through mid-January, surging +21% year-over-year. This acceleration positions India as a critical factor in the global supply dynamic, particularly as the country signals greater export intentions.

Reinforcing this supply pressure, the India Sugar Mill Association (ISMA) raised its full-season 2025/26 production forecast to 31 MMT from an earlier 30 MMT estimate, representing a +18.8% year-over-year jump. Notably, ISMA simultaneously reduced its estimate for ethanol conversion to just 3.4 MMT from a prior 5 MMT projection, effectively freeing up more sugar for export channels. With India ranking as the world’s second-largest producer, these supply shifts carry outsized influence on global sugar price dynamics.

Brazil Expansion and Export Capacity Drive Prices Lower

Brazil’s contribution to the sugar price decline cannot be overlooked. Production metrics from Unica showed Brazil’s Center-South region crushed 40.158 MMT of sugar through mid-December, marking a +0.9% year-over-year increase. More significantly, Brazilian millers allocated 50.91% of cane to sugar production in the current season versus 48.19% in the prior year, demonstrating a strategic shift toward sugar at the expense of ethanol.

Brazil’s official crop forecaster Conab elevated its 2025/26 production estimate to 45 MMT from a previous 44.5 MMT projection in early November. The Brazilian Sugar Millers Corp and other industry participants are now targeting record output levels, further reinforcing the bearish tone for sugar price levels.

Global Supply Surplus Emerges as Core Pressure Point

The combination of Indian and Brazilian expansion has crystallized into a pronounced global supply surplus. The International Sugar Organization (ISO) forecasted on November 17 that a 1.625 million MT surplus would materialize in 2025-26, reversing a 2.916 million MT deficit observed in 2024-25. ISO projects global sugar production climbing +3.2% year-over-year to 181.8 million MT, driven predominantly by increased output across India, Thailand, and Pakistan.

Covrig Analytics initially estimated a 2025/26 global surplus of 4.1 MMT in October before raising that figure to 4.7 MMT in subsequent analysis. Meanwhile, sugar trader Czarnikow offered an even more pessimistic view, boosting its surplus estimate to 8.7 MMT in November, up 1.2 MMT from a September projection of 7.5 MMT. The U.S. Department of Agriculture’s December report supported this negative tone, predicting global 2025/26 sugar production would reach a record 189.318 MMT while human consumption would increase only +1.4% to 177.921 MMT.

Thailand and Rising Export Competition

Thailand, the world’s third-largest sugar producer and second-largest exporter, is adding to the competitive pressures. The Thai Sugar Millers Corp projected that 2025/26 output would advance +5% year-over-year to 10.5 MMT. The USDA Foreign Agricultural Service (FAS) provided a slightly more conservative forecast of 10.25 MMT but maintained an optimistic production trajectory. Thailand’s export-oriented profile means this expansion directly competes with Indian and Brazilian supplies in global markets.

Structural Support Factors Limited to Distant Horizon

Limited bright spots exist for sugar price prospects in the near to medium term. Consulting firm Safras & Mercado suggested that Brazil’s production would normalize downward in 2026/27, declining -3.91% to 41.8 MMT from the expected 43.5 MMT in 2025/26. Brazilian sugar exports would correspondingly fall -11% year-over-year to 30 MMT. Covrig Analytics projects that the 2026/27 global surplus will compress significantly to 1.4 MMT as depressed pricing discourages new production planting.

However, these supportive factors remain distant. The USDA’s Foreign Agricultural Service projected that India’s 2025/26 production would surge +25% to 35.25 MMT on the back of favorable monsoon patterns and expanded acreage. The resulting export capacity will likely sustain sugar price pressures through the remainder of the current marketing season and into early 2026.

Market Implications and Outlook

The combination of record global production, expanding export capacity from major suppliers, and a structural shift from ethanol toward sugar production has created a multi-year headwind for sugar price recovery. With global ending stocks projected to fall modestly to 41.188 MMT and surplus dynamics likely to persist, near-term relief appears limited. The sugar price weakness observed in recent sessions reflects the market’s rational response to a supply-dominated fundamental picture.