Global Sugar Market Undercut by Surging Production from India and Major Producers

Sugar futures retreated across major markets today as production forecasts from the world’s leading sugar producers continue to undercut prices. March NY world sugar #11 (SBH26) declined -0.02 (-0.14%), while May London ICE white sugar #5 (SWK26) fell -0.90 (-0.22%). The Indian Sugar and Bio-energy Manufacturers Association (ISMA) projected India’s 2025/26 output at 29.3 MMT, up 12% year-over-year, placing additional downward pressure on the global market.

India’s Record Output Weighs on Sugar Prices

India’s expanding production figures represent the primary force undercut global sugar valuations. The ISMA’s latest forecast signals continued export momentum from the world’s second-largest producer. Recent data showed that from October through mid-January, India’s output reached 15.9 MMT, representing a 22% year-over-year jump. This surge in domestic production enabled India’s government to approve an additional 500,000 MT of sugar exports on top of the 1.5 MMT quota established in November, expanding India’s presence in global markets.

The increased export potential from India has directly compressed international sugar prices. By mid-February, India had received clearance for substantial additional export volumes, signals that undercut market sentiment and weighed on futures contracts. The ISMA also reduced its ethanol production estimate for India to 3.4 MMT from a July projection of 5 MMT, freeing up more supply for export markets and extending bearish pressure on prices.

Brazil’s Export Challenges Provide Limited Price Support

While Indian production surges ahead, Brazil’s situation offers only marginal support for prices. The Brazilian real rallied to a 1.75-year high against the dollar, discouraging sugar export sales from Brazilian producers. However, cumulative 2025-26 Center-South sugar output through January climbed 0.9% year-over-year to 40.24 MMT, failing to offset the bearish impact of Indian expansion.

Production data for Brazil’s Center-South region in late January showed an expected seasonal decline, with output falling 36% year-over-year to just 5,000 MT. Yet this temporary setback remains overshadowed by the long-term structural increase in Indian supplies. Analysis from Safras & Mercado suggests Brazil’s sugar production will contract by 3.91% in 2026/27 to 41.8 MMT, with exports expected to fall 11% year-over-year to 30 MMT—developments that fail to counter the price-undercut dynamics driven by competitors.

Global Surplus Forecasts Extend Bearish Pressure

International organizations and trading houses maintain decidedly bearish outlooks for the global sugar market. The International Sugar Organization (ISO) forecasted a 1.625 million MT surplus for 2025-26, with production expanding 3.2% year-over-year to 181.8 million MT. This surplus reverses the prior year’s 2.916 million MT deficit and reflects surging output across India, Thailand, and Pakistan.

Major trading houses have escalated their surplus estimates. Czarnikow increased its 2025/26 global surplus forecast to 8.7 MMT in early November, up 1.2 MMT from September projections. Green Pool Commodity Specialists forecast a 2.74 MMT surplus for 2025/26, while StoneX projected 2.9 MMT. The USDA’s December forecast was particularly expansive, projecting global 2025/26 production reaching a record 189.318 MMT, climbing 4.6% year-over-year, while consumption would increase just 1.4% to 177.921 MMT. These structural supply-demand imbalances undercut price recovery attempts.

Thailand’s Expansion Reinforces Global Headwinds

Thailand’s anticipated production increase adds another dimension to the bearish outlook. The Thai Sugar Millers Corp projected the 2025/26 crop at 10.5 MMT, up 5% year-over-year. As the world’s third-largest producer and second-largest exporter, Thailand’s expanded output continues to undercut any near-term price recovery. The USDA’s Foreign Agricultural Service projected Thailand’s output at 10.25 MMT for 2025/26, modestly lower than the Thai millers’ estimate but still representing growth that pressures valuations.

Fund Positioning Signals Market Vulnerability

Recent trader positioning data reveals extreme bearish sentiment that could amplify price weakness. The latest Commitment of Traders (COT) report showed funds boosted net short positions in NY sugar futures to a record 265,324 contracts as of mid-February—the highest level since 2006. This excessively short positioning creates technical vulnerability, though the fundamental outlook remains decidedly bearish with production forecasts continuing to undercut price support mechanisms.

Sugar market participants face a complex landscape where production expansion from multiple regions undercuts traditional price recovery patterns. While Brazilian currency strength and minor output fluctuations provide temporary respiration, the weight of Indian expansion, global surplus forecasts, and structural oversupply dynamics appear likely to contain any significant upside movement in the near term.