Global Sugar Supply Glut Intensifies as Major Producers Ramp Up Output

Sugar price weakness continued Monday as market participants grappled with mounting concerns over global oversupply. The March NY contract (#11) declined 0.05 points (-0.34%), while the London ICE white sugar (#5) slipped 2.50 points (-0.59%), reflecting investor anxiety about burgeoning worldwide stockpiles.

Surging Supply Estimates Paint Bleak Picture for Sugar Rate Today

Covrig Analytics significantly raised its projections for the 2025/26 season, estimating a global surplus of 4.7 million metric tons compared to its October forecast of 4.1 MMT. This expanding oversupply picture has pressured values, though some relief emerged from expectations that 2026/27 surpluses will contract to 1.4 MMT as depressed pricing discourages planting.

Market watchers noted that commodity index rebalancing could provide near-term support. Citigroup projects approximately $1.2 billion in fresh capital flowing into sugar futures through the major BCOM and S&P GSCI indexes this week, potentially offsetting fundamental bearish pressure.

Regional Production Dynamics Reshaping Market Outlook

Brazil’s Mixed Signals

Brazil’s production trajectory presents a paradox for the sugar market. Conab raised its 2025/26 estimate to a record 45 MMT in November, with recent crushing data showing 39.904 MMT through November, up 1.1% year-over-year. However, Safras & Mercado cautioned that 2026/27 output would decline 3.91% to 41.8 MMT, with exports dropping 11% to 30 MMT—a potential bullish turning point that limited losses Monday.

India’s Export Boom

India’s surging production threatens near-term stability. The India Sugar Mill Association reported December production jumped 25% to 11.90 MMT, while raising full-season estimates to 31 MMT (+18.8% y/y). More critically, the government signaled approval for expanded exports beyond the current 1.5 MMT allocation, potentially releasing 2-3 MMT of additional supply onto global markets as India seeks relief from domestic gluts.

Thailand’s Contribution

The Thai Sugar Millers Corp projects a 5% increase to 10.5 MMT for 2025/26, reinforcing Thailand’s position as the world’s third-largest producer and second-largest exporter, further adding to global supply pressures.

Official Forecasters Predict Record Production Amid Consumption Gains

The USDA’s December report painted a sobering supply picture. Global sugar production is forecast to climb 4.6% to a record 189.318 MMT, while consumption rises a more modest 1.4% to 177.921 MMT. Year-end stocks are expected to contract 2.9% to 41.188 MMT—still historically ample.

The International Sugar Organization similarly warned of a 1.625 MMT surplus in 2025/26 after last season’s deficit, driven by Indian, Thai, and Pakistani increases. Sugar trader Czarnikow went further, projecting an 8.7 MMT global surplus, signaling persistent downside risk for sugar rate movements ahead.

FAS projections aligned with this bearish narrative: Brazil reaching 44.7 MMT, India climbing 25% to 35.25 MMT, and Thailand rising 2% to 10.25 MMT—all supportive of near-term pricing weakness.