Global Sugar Market Update: Supply Surges and Price Pressures
- Sugar futures are trading lower due to an improving supply outlook, particularly from India.
- India’s sugar production has seen a significant year-over-year jump in output.
- Brazil is also projected to reach record sugar production levels in the upcoming season.
- Recent forecasts indicate a global sugar surplus for the 2025-26 season, contrasting with previous deficit expectations.
- Record high global production forecasts have been weighing heavily on sugar prices since early October.
- Adjustments in production estimates from key players like Czarnikow further highlight the bearish supply sentiment.
Factors Driving Current Sugar Market Dynamics
March NY world sugar #11 (SBH26) futures have seen a slight decrease today, down -0.03 (-0.20%), while March London ICE white sugar #5 (SWH26) futures are also trading lower, down -2.90 (-0.68%). These movements are largely influenced by an increasingly optimistic supply outlook for sugar globally.
Recent reports point towards India significantly ramping up its sugar production. The India Sugar Mill Association (ISMA) revealed that sugar production from October to November surged by an impressive 43% year-over-year, reaching 4.11 million metric tons (MMT). This increase is partly attributed to a higher number of sugar mills actively crushing cane; as of November 30, 428 mills were operational, up from 376 in the previous year.
📊 Insight: Stronger domestic production in India can impact global sugar exports, potentially increasing availability and influencing international prices. Keep an eye on India’s export policies as production levels rise.
Brazil’s Record Sugar Output Outlook
The global sugar market is also contending with the prospect of record-breaking sugar output from Brazil, a major player in the international sugar trade. Conab, Brazil’s official crop forecasting agency, revised its 2025/26 sugar production estimate upwards to 45 MMT, an increase from the prior forecast of 44.5 MMT.
Data from Unica for Brazil’s Center-South region further supports this bullish production trend. In the first half of November, sugar output rose by 8.7% year-over-year. Cumulatively for the 2025-26 season through mid-November, output has climbed 2.1% year-over-year to 39.179 MMT, underscoring the robust harvest.
⚡ Tip: Monitor the exchange rate between the Brazilian Real and the US Dollar. A weaker Real can incentivize Brazilian producers to export more sugar, further contributing to global supply increases.
Shifting Global Supply Forecasts
Just recently, sugar prices had experienced a rally to six-week highs on concerns about potentially tighter global supplies. This sentiment was influenced by StoneX’s revised estimate, which lowered Brazil’s 2026/27 Center-South sugar production forecast to 41.5 MMT from 42.1 MMT. However, this outlook has been overshadowed by more recent and pervasive supply-side expectations.
Adding to the bearish sentiment, the International Sugar Organization (ISO) released a forecast on November 17 predicting a global sugar surplus of 1.625 million metric tons for the 2025-26 season. This stands in stark contrast to their previous forecast of a 2.916 million MT deficit for the 2024-25 period. The ISO attributes this shift primarily to increased sugar production expected from India, Thailand, and Pakistan.
Key Factors Influencing Sugar Price Trends
In a potentially bullish development for sugar prices, India’s food ministry is reportedly considering an increase in the price of ethanol used for gasoline blending. Such a move could incentivize Indian sugar mills to prioritize ethanol production over sugar, potentially reducing the overall sugar supply available for export and domestic markets.
Support for sugar prices is also seen from India’s decision to permit mills to export 1.5 MMT of sugar during the 2025/26 season. This volume is lower than earlier expectations of 2 MMT and follows India’s introduction of export quotas in the 2022/23 season due to production shortfalls. These export limitations can provide a floor for prices by restricting global availability.
📍 Analysis: The market is currently weighing the potential for increased Indian ethanol production against the high overall sugar output projections. Policy decisions from major producing nations like India significantly influence these dynamics.
Broader Market Trends and Projections
The prevailing outlook for robust global sugar supplies has placed considerable downward pressure on sugar prices since early October. Several key price points have been tested and broken in recent weeks. London sugar futures (SWZ25) reached a 4.75-year low on November 13, and NY sugar futures (SBH26) slumped to a 5-year low on November 6.
These declines are primarily linked to increased sugar output from Brazil and forecasts predicting a global sugar surplus. Sugar trader Czarnikow has also revised its own estimates, raising its global 2025/26 sugar surplus projection to 8.7 MMT, a significant increase from its September estimate of 7.5 MMT, further cementing the bearish supply narrative.
India’s Production Revisions and Export Potential
Revisions in India’s sugar production estimates are a significant factor impacting market sentiment. The India Sugar Mill Association (ISMA) raised its 2025/26 India sugar production forecast to 31 MMT from a previous 30 MMT, marking an 18.8% year-over-year increase. This substantial rise in output levels is a direct contributor to the current price weakness.
Furthermore, ISMA reduced its sugar diversion estimate for ethanol production to 3.4 MMT from 5 MMT. This lower diversion figure suggests that more sugarcane may be processed into sugar, potentially increasing the volume available for export and further contributing to global supplies. Such an increase in potential sugar exports from India carries negative implications for international sugar prices.
✅ Factor to Watch: India’s monsoon season rainfall plays a crucial role. Above-average rainfall in September, 8% above normal and marking the strongest monsoon in five years, suggests a bumper crop, which often translates to higher sugar production and increased export potential.
Thailand and USDA Projections Add to Supply Picture
The outlook for increased sugar production in Thailand also contributes to the bearish sentiment in the global market. The Thai Sugar Millers Corp projects a 5% year-over-year increase in Thailand’s 2025/26 sugar crop, estimating it at 10.5 MMT. This follows a 14% rise in production for the 2024/25 season, underscoring Thailand’s consistent growth as a major sugar producer and exporter.
The United States Department of Agriculture (USDA), in its semi-annual report released in May, projected global 2025/26 sugar production to reach a record 189.318 MMT, a 4.7% increase year-over-year. The USDA also forecasts a record 177.921 MMT in global human sugar consumption, with ending stocks expected to climb by 7.5% to 41.188 MMT. These figures reinforce the expectation of ample global sugar supplies.
Frequently Asked Questions about Global Sugar Markets
What is causing sugar prices to decline?
Sugar prices are currently declining primarily due to an optimistic outlook for increased global sugar supplies. Major producing countries like India and Brazil are anticipating significant increases in their sugar output for the upcoming seasons, which is expected to lead to a global surplus.
How are production forecasts from India and Brazil affecting sugar prices?
Both India and Brazil are projecting record or near-record sugar production. India’s output has already seen a substantial year-over-year increase, and Brazil is expected to achieve its highest production levels. These robust supply forecasts are putting downward pressure on sugar futures prices.
What is the International Sugar Organization’s (ISO) latest forecast?
The ISO has shifted its forecast from a deficit to a surplus for the 2025-26 season. They now predict a global sugar surplus of 1.625 million MT, driven by higher production in India, Thailand, and Pakistan, a significant reversal from earlier expectations of a deficit.
Could India’s ethanol policy impact sugar prices?
Yes, India’s food ministry is considering boosting ethanol prices for gasoline blending. If implemented, this could encourage sugar mills to divert more cane towards ethanol production, reducing the amount of sugar available for domestic consumption and export, which could potentially support sugar prices.
Are there any bullish factors for sugar prices currently?
While supply-side concerns dominate, potential bullish factors include policy decisions in India regarding ethanol pricing, which might divert cane away from sugar production. Additionally, India’s capped sugar export quota for the 2025/26 season could limit global availability to some extent.
Concluding Thoughts on the Sugar Market
The global sugar market is currently navigating a period of anticipated oversupply, driven by strong production forecasts from major agricultural powerhouses like India and Brazil. This shift from expected deficits to significant projected surpluses has been the primary catalyst for the sustained pressure on sugar prices since early October.
While policy adjustments, such as India’s ethanol pricing reviews or export quotas, might offer localized support or temporary price boosts, the overarching trend appears to be dictated by expanding global production capacity. Traders and investors will need to closely monitor crop reports, weather patterns in key growing regions, and government policies in major sugar-producing and consuming nations to gauge future price movements.
