Global Sugar Glut Takes Shape: Production Surge Across Brazil, India, and Thailand Pressures Prices

Sugar markets showed mixed signals today as short covering buoyed prices, but the underlying trend tells a different story. March New York sugar rose 1.35% while London ICE white sugar climbed 0.56%, yet these gains mask growing concerns about oversupply heading into 2025/26.

The Supply Avalanche Is Coming

The real story brewing beneath today’s price rebound is a dramatic production expansion among the world’s three largest sugar producers. Brazil, which dominates global supplies, is ramping up output significantly. According to Barchart’s commodity analysis, the USDA projects Brazil’s sugar production will hit a record 44.7 million metric tons (MMT) in 2025/26, representing a 2.3% year-over-year increase. Meanwhile, cumulative Center-South sugar output through November already reached 39.904 MMT, up 1.1% from the prior year.

India, the world’s second-largest producer, is becoming an even bigger wild card. The USDA forecasts India’s 2025/26 production will surge 25% to 35.25 MMT—driven by favorable monsoon patterns and expanded planting acreage. In October-December alone, Indian mills already crushed 11.83 MMT, up 24% year-over-year. Even Thailand, the third-largest producer, is increasing output by 2% to 10.25 MMT.

A Structural Surplus Is Forming

These production gains are colliding with slower demand growth. Global sugar consumption is projected to rise just 1.4% to 177.921 MMT, while production is accelerating at 4.6% to reach a record 189.318 MMT. The International Sugar Organization confirmed this mismatch, forecasting a 1.625 million MT surplus in 2025/26 versus a deficit of 2.916 million MT in 2024/25.

Sugar trader Czarnikow raised its surplus estimate even higher, now projecting an 8.7 MMT oversupply for 2025/26—nearly double what was expected just months earlier. This structural imbalance suggests price pressures will persist regardless of short-term trading dynamics.

What’s Happening in Individual Markets

India is poised to become a major exporter again. After the India Sugar Mill Association raised its 2025/26 production forecast to 31 MMT in November, the country’s food ministry signaled willingness to allow additional exports beyond the current 1.5 MMT quota to clear domestic inventory gluts. This export potential adds another headwind for prices.

Brazil’s supply picture is complicated by a shift in crushing patterns. While record production is on the table, the ratio of cane processed for sugar versus ethanol has risen to 51.12% in 2025/26 from 48.34% the prior year, indicating sugar is being prioritized—another bearish signal for pricing.

The Bottom Line

Today’s price recovery on year-end fund positioning masks a deeper reality: the sugar market is entering 2025/26 swimming in excess supplies. Production records across Brazil, India, and Thailand, combined with a supply forecast that dramatically outpaces demand growth, suggest the structural headwinds are just beginning. Barchart’s monitoring of these commodity dynamics shows traders should prepare for prolonged pressure on sugar valuations throughout the coming season.