Global Sugar Supply Outlook Signals Mixed Market Dynamics Amid Production Shifts

Sugar markets displayed conflicting signals today, with New York futures rising 0.59% while London white sugar declined 0.28%. The divergence reflects broader tensions between production momentum and export capacity concerns across major producing regions.

Brazil’s Production Contraction Emerging as Key Price Driver

Recent market movements draw support from projections of declining Brazilian sugar output. Consulting firm Safras & Mercado forecast that Brazil’s sugar production for the 2026/27 season will contract to 41.8 million metric tons (MMT), representing a 3.91% decline from the anticipated 43.5 MMT in 2025/26. The firm simultaneously projects Brazilian exports will shrink approximately 11% year-over-year to 30 MMT during the same period.

This production outlook stands in contrast to near-term bullishness. Brazil’s Center-South region, which accounts for the majority of national output, demonstrated resilience in early season metrics. Through November, the region’s cumulative production reached 39.904 MMT for the 2025/26 cycle, marking a 1.1% increase year-over-year. Notably, mills directed a higher proportion of crushed cane toward sugar rather than ethanol production—the sugar ratio climbed to 51.12% in 2025/26 compared to 48.34% in the prior year.

India’s Expanded Production Capacity Pressures Market Balance

India’s emergence as a larger exporter presents downward pressure on global sugar prices. The country’s food ministry has signaled willingness to permit additional sugar export quotas beyond the 1.5 MMT approved for the 2025/26 season to address domestic oversupply conditions. This comes after the India Sugar Mill Association raised its production estimate for 2025/26 to 31 MMT in November, up 18.8% year-over-year from the previous 30 MMT forecast.

Early-season crushing data underscores production momentum. Indian mills processed 7.83 MMT of sugar between October 1 and December 15, representing a 28% year-over-year jump. Simultaneously, ISMA reduced its ethanol consumption forecast to 3.4 MMT from a prior estimate of 5 MMT, potentially freeing additional volumes for export markets. The result tilts toward surplus conditions when combined with global supply trends.

Global Sugar Stocks and Broader Production Environment

The International Sugar Organization characterized the 2025/26 season as one of abundant supply, forecasting a global surplus of 1.625 MMT following the prior year’s deficit of 2.916 MMT. The organization attributed this swing to expanded production in India, Thailand, and Pakistan, projecting global sugar production will climb 3.2% year-over-year to 181.8 MMT.

More aggressive surplus estimates emerged from trader Czarnikow, which elevated its 2025/26 projection to 8.7 MMT—a 1.2 MMT upward revision from September forecasts. The USDA’s December report painted an even larger supply picture, predicting global production would reach a record 189.318 MMT (up 4.6% annually) against consumption projected at 177.921 MMT. Global sugar ending stocks were forecast to decline 2.9% year-over-year to 41.188 MMT, indicating ample supply despite modest inventory drawdowns.

Regional Production Dynamics Reshape Market Structure

Thailand, the world’s third-largest producer and second-largest exporter, projects a 5% production increase to 10.5 MMT for 2025/26. The USDA forecast an even more modest 2% rise to 10.25 MMT. Meanwhile, the USDA’s Foreign Agricultural Service predicted India’s output would reach 35.25 MMT—a 25% year-over-year surge driven by favorable monsoon patterns and expanded acreage. Brazil’s production was projected at a record 44.7 MMT, representing a 2.3% annual increase.

These interconnected production waves create complex dynamics for commodity investors tracking sugar futures and supply chain participants. The interplay between Brazil’s anticipated contraction in 2026/27 and near-term global expansion suggests market participants remain cautious about longer-term supply availability, even as immediate oversupply pressures temper price enthusiasm in current trading sessions.