Global Sugar Report: How Rising Output Is Shifting Market Dynamics

The sugar market is facing sustained pressure as multiple major producers move toward record output in the 2025-26 season. Recent reports from key industry bodies reveal that abundant supplies are reshaping price expectations, with global production climbing while buyers face an extended period of favorable pricing conditions. This sugar report examines the confluence of factors driving the current market environment and what lies ahead.

Record Production Across Major Exporters Tests Market Balance

Brazil, India, and Thailand—the world’s largest sugar-producing regions—are all reporting substantial increases in output. According to Conab, Brazil’s crop forecasting agency, the country’s 2025-26 sugar production has been raised to 45 million metric tons (MMT), representing a notable upward revision. The shift in crushing priorities has also contributed to this surge, with Brazilian producers increasing the ratio of cane dedicated to sugar production rather than alternative uses.

India’s situation is equally notable. The India Sugar Mill Association (ISMA) reported production through mid-January reached 15.9 MMT, already up 22% year-over-year at that early stage of the season. The association subsequently raised its full-year forecast for 2025-26 to 31 MMT, representing an 18.8% increase from the prior year. Critically, India’s ethanol program has consumed less sugar than initially expected, freeing up inventory for potential export markets.

Thailand, the world’s third-largest sugar producer and second-largest exporter, is contributing to the broader supply picture. The Thai Sugar Millers Corporation projected that 2025-26 output would climb approximately 5% year-over-year to 10.5 MMT, adding further to the global availability equation.

Global Supply Surplus Outpaces Demand Growth

The International Sugar Organization (ISO) forecasted a 1.625 million MT surplus for the 2025-26 season, a sharp reversal from the prior-year deficit. The organization also projects global production climbing 3.2% year-over-year to 181.8 million MT, substantially outpacing the expected 1.4% growth in consumption. Other analysts paint an even more expansive picture: Czarnikow, a prominent sugar trading firm, estimates the 2025-26 global surplus at 8.7 MMT, while Covrig Analytics projects 4.7 MMT.

This surplus dynamic fundamentally alters the backdrop for both prices and export strategies. The USDA’s December forecast projected global production at a record 189.3 MMT while consumption was pegged at 177.9 MMT, suggesting ending stocks would decline only modestly despite the production boom.

Export Policies and Market Access Reshape Competition

A key driver of near-term price pressure has been India’s commitment to export additional volumes. The government approved mills to export 1.5 MMT during the 2025-26 season after India’s food secretary signaled potential flexibility on export quotas to manage domestic supply conditions. India had implemented strict export controls beginning in 2022-23 following rainfall disruptions, so the recent policy shift represents a material change in global trade flows.

This willingness to export could help absorb India’s production surge, but it simultaneously introduces additional supply into world markets precisely when other major producers are also ramping up volumes.

Mixed Signals for 2026-27: When Supply May Tighten

While the current season points toward sustained oversupply, medium-term forecasts suggest a potential moderation. Safras & Mercado, a consulting firm focused on Brazilian agriculture, projects that Brazil’s 2026-27 output will decline approximately 3.9% to 41.8 MMT from the expected 43.5 MMT in the current season. The firm further estimates Brazilian exports in 2026-27 at 30 MMT, representing an 11% decline from current year levels.

Covrig Analytics similarly projects that the 2026-27 global surplus will compress to 1.4 MMT from the current estimates, suggesting tighter market conditions could emerge if production disappoints relative to forecast.

Market Implications and Price Pressures

The immediate outlook for the sugar market reflects the reality of substantial oversupply. While near-term prices face headwinds from production abundance, the longer view suggests that tight margins and weak pricing may ultimately discourage future planting, potentially creating a more balanced supply-demand environment in subsequent seasons. Traders monitoring this sugar report should remain attuned to both near-term production data and the policy decisions that govern export availability, as these factors will continue to shape price direction in the months ahead.