Global Sugar Surplus Pressures Markets as India's Stocks Swell

The sugar market faces mounting headwinds as global oversupply reaches alarming levels, with India’s burgeoning sugar stocks and export policies emerging as a critical factor driving prices lower. March NY ICE sugar has collapsed to a 2.5-month low, while London sugar has plummeted to a 5-year low, reflecting broader concerns about record production levels outpacing demand across major producing nations.

India’s Sugar Stocks Expand Amid Policy Shifts

India’s sugar stocks in india are growing significantly, reshaping global market dynamics. According to the India Sugar Mill Association (ISMA), the country’s sugar production from October 1 to January 15 reached 15.9 MMT, marking a 22% year-over-year increase. More substantially, ISMA raised its 2025/26 production estimate to 31 MMT in November, up 18.8% compared to the previous year—a stunning growth trajectory for the world’s second-largest sugar producer.

This surge in Indian output has intensified domestic supply pressures. The government addressed the glut by permitting exports of 1.5 MMT during the 2025/26 season, a significant policy reversal. Notably, India introduced its sugar export quota system in 2022/23 after late rains had constrained supply, but abundant production has since forced policymakers to allow greater export flexibility. The revised export allowance aims to clear excess sugar stocks that would otherwise depress domestic prices further.

Adding to export momentum, ISMA revised its ethanol-dedicated sugar estimate downward to 3.4 MMT from 5 MMT projected in July, freeing additional capacity for international sales and intensifying global price competition.

Production Surges Across Major Growing Regions

Brazil continues expanding output despite already commanding the world’s largest sugar industry. Conab, Brazil’s crop forecasting agency, raised its 2025/26 production estimate to 45 MMT in November, up from 44.5 MMT. The Center-South region—accounting for majority of Brazilian output—crushed more cane designated for sugar, with ratios rising to 50.82% in 2025/26 from 48.16% the prior year, driving cumulative output to 40.222 MMT through December, up 0.9% annually.

Thailand, the world’s third-largest producer and second-largest exporter, projects 2025/26 output will climb 5% year-over-year to 10.5 MMT, according to the Thai Sugar Millers Corp. Meanwhile, the International Sugar Organization forecasts global production will rise 3.2% in 2025/26 to 181.8 million MT, driven by increased output in India, Thailand, and Pakistan collectively.

Surplus Estimates Widen as Markets Face Structural Headwinds

Multiple forecasting agencies agree that global oversupply will persist through 2026/27, though estimates vary. The International Sugar Organization projects a 1.625 million MT surplus in 2025/26, following a 2.916 million MT deficit in 2024/25. However, other analysts are more pessimistic: Covrig Analytics raised its 2025/26 surplus estimate to 4.7 MMT in December, up from 4.1 MMT in October, though it expects the 2026/27 surplus to narrow to 1.4 MMT as weak prices discourage future planting.

Sugar trader Czarnikow projected an even larger 8.7 MMT surplus for 2025/26, up 1.2 MMT from its September forecast of 7.5 MMT. Green Pool Commodity Specialists and StoneX offered comparable outlooks, with estimates of 2.74 MMT and 2.9 MMT respectively for 2025/26.

The USDA, in its December 16 report, projected global 2025/26 sugar production would jump 4.6% year-over-year to a record 189.318 MMT, while human consumption would grow only 1.4% to 177.921 MMT. Critically, the agency forecasted global ending stocks would contract 2.9% to 41.188 MMT—still elevated relative to historical norms. USDA’s Foreign Agricultural Service expects Brazil production to rise 2.3% to 44.7 MMT, India output to surge 25% to 35.25 MMT, and Thailand production to increase 2% to 10.25 MMT.

Market Outlook Remains Structurally Weak

The persistent surplus outlook acts as a powerful headwind for prices. While one potential bright spot emerges—Safras & Mercado’s projection that Brazilian sugar production will decline 3.91% in 2026/27 to 41.8 MMT from 43.5 MMT expected in 2025/26, coupled with an 11% decline in exports to 30 MMT—such relief remains distant. The pressing challenge today centers on absorbing the massive near-term surplus, particularly as India’s sugar stocks in india continue expanding and export policies aim to redirect excess supply into international channels, intensifying price competition for global purchasers across 2025 and into 2026.