Global sugar prices are experiencing a notable decline today, with May NY world sugar #11 (SBK26) dropping by 1.50% and May London ICE white sugar #5 (SWK26) falling 0.84%. This downturn has pushed NY sugar to a two-week low, primarily attributed to a significant ramp-up in sugar production from India, the world’s second-largest producer, alongside broader concerns about a persistent global surplus.
India’s Output Drives Market Downturn
The immediate pressure on sugar markets stems from India’s robust production figures. India’s National Federation of Cooperative Sugar Factories Ltd. recently reported that the nation’s 2025-26 sugar output for the period of October 1 to March 31 surged by 9% year-over-year, reaching 27.12 million metric tons (MMT). This substantial increase has fueled expectations of higher exports, undercutting global prices.
Further projections reinforce this outlook. The Indian Sugar and Bio-energy Manufacturers Association (ISMA) on March 11 projected India’s 2025/26 sugar production at 29.3 MMT, marking a 12% increase year-over-year. While this was a slight downward revision from an earlier forecast of 30.95 MMT, ISMA also cut its estimate for sugar used for ethanol production in India to 3.4 MMT from a July forecast of 5 MMT. This reduction in ethanol diversion could free up more sugar for export, further contributing to global supply.
The U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) provided an even more optimistic forecast for India, predicting its 2025/26 sugar production to increase by a substantial 25% year-over-year to 35.25 MMT. This growth is primarily driven by favorable monsoon rains and an expansion in sugar acreage. In a move reflecting its increased output, India’s government approved an additional 500,000 MT of sugar for export for the 2025/26 season on February 13, supplementing the 1.5 MMT already approved in November.
Mounting Global Surplus Pressures
Beyond India, a confluence of factors points to a significant global sugar surplus, maintaining downward pressure on prices. Brazil, the world’s largest sugar producer, is also contributing to the ample supply. Unica reported last Friday that cumulative 2025-26 Center-South sugar output from October through mid-March rose by 0.7% year-over-year to 40.25 MMT. Brazilian sugar mills have notably boosted the amount of cane crushed for sugar to 50.61%, up from 48.08% last year, indicating a strategic shift towards sugar production over ethanol.
Analysts and international organizations have consistently forecasted a global surplus for the upcoming crop years:
- Sugar trader Czarnikow, on February 11, projected a global sugar surplus of 3.4 MMT in the 2026/27 crop year, following an 8.3 MMT surplus in 2025/26.
- Green Pool Commodity Specialists, on January 29, anticipated a 2.74 MMT global sugar surplus for 2025/26 and a 156,000 MT surplus for 2026/27.
- StoneX, on February 13, also expected a global sugar surplus of 2.9 MMT in 2025/26.
- The International Sugar Organization (ISO), on February 27, forecasted a 1.22 MMT sugar surplus in 2025-26, a stark reversal from a 3.46 MMT deficit in 2024-25. ISO attributed this surplus to increased production in India, Thailand, and Pakistan, projecting a 3.0% year-over-year rise in global sugar production to 181.3 MMT in 2025-26.
The USDA, in its bi-annual report released on December 16, projected global 2025/26 sugar production to climb 4.6% year-over-year to a record 189.318 MMT. While global human sugar consumption is also expected to increase by 1.4% year-over-year to a record 177.921 MMT, the production growth outpaces demand. FAS additionally predicted Thailand’s 2025/26 sugar production to increase by 2% year-over-year to 10.25 MMT.
Mitigating Factors and Market Dynamics
Despite the prevailing bearish sentiment, some factors are limiting deeper losses in sugar prices. A significant 11% surge in WTI crude oil prices (CLK26) today is providing some support. Crude oil’s rally to a 3.75-year high last month boosted ethanol prices, potentially encouraging sugar mills worldwide to increase ethanol production and, consequently, curb sugar output. This dynamic can shift some cane away from sugar production, offering a floor to prices.
Furthermore, supply disruptions, such as the closure of the Strait of Hormuz, have provided some underlying support. According to Covrig Analytics, the strait’s closure has curbed approximately 6% of the world’s sugar trade, constraining refined sugar output and thereby mitigating some of the oversupply concerns.
However, these mitigating factors appear to be overshadowed by the sheer volume of anticipated sugar production. The consistent forecasts of substantial global surpluses from multiple authoritative sources, coupled with the confirmed ramp-up in output from key producers like India and Brazil, suggest that the market will continue to grapple with an abundance of supply. This outlook indicates that sugar prices are likely to remain under pressure in the near term, as the market adjusts to the increased availability of the commodity.
