Global Sugar Surplus Drains Prices: A Barchart Analysis of London Sugar and Market Pressures

Sugar markets are struggling under the weight of abundant supplies, as both near-term and long-term forecasts point to a world awash in sweetener. According to Barchart’s commodity analysis, this supply-driven pressure is reflected across multiple trading hubs. NY sugar futures (SBH26) gained +0.06 points (+0.41%) on Monday, while London sugar contracts (SWH26) declined -4.70 points (-1.12%), illustrating the divergent pressures across major markets. The weakness in London sugar underscores the global bearish sentiment, though some support came from a weaker US dollar lifting NY prices.

Record Production from Major Sugar-Producing Nations Floods Markets

Brazil, India, and Thailand are collectively expanding output at unprecedented rates, saturating global supplies. Brazil’s Center-South region is projected to produce 45 MMT in 2025-26 according to Conab, representing an increase from earlier forecasts of 44.5 MMT. Unica reported that the ratio of cane crushed for sugar rose to 50.82% in 2025-26 from 48.16% in 2024-25, signaling a shift toward greater sugar production relative to ethanol.

India’s surge is equally dramatic. The India Sugar Mill Association (ISMA) raised its 2025-26 production estimate to 31 MMT, up +18.8% year-over-year. Output from October 1 to January 15 reached 15.9 MMT, already up +22% compared to the same period last year. Crucially, ISMA cut its estimate for sugar diverted to ethanol production in India from 5 MMT to 3.4 MMT, freeing up additional volume for export. This shift carries major implications for global prices, as India is positioned to export 1.5 MMT under the government’s export quota for the 2025-26 season—a decision aimed at managing domestic supply gluts.

Thailand’s Thai Sugar Millers Corp projects a +5% year-over-year increase in output to 10.5 MMT for 2025-26, maintaining its role as the world’s second-largest exporter alongside being the third-largest producer.

Global Surplus Forecasts Weigh Heavily on Price Prospects

Multiple organizations project significant global sugar surpluses for the current season. Covrig Analytics estimates a 2025-26 surplus of 4.7 MMT, raised from 4.1 MMT in its October forecast. The International Sugar Organization (ISO) forecasts a 1.625 million MT surplus in 2025-26 following a 2.916 million MT deficit in 2024-25, driven by increased production in India, Thailand, and Pakistan. ISO projects global sugar production rising +3.2% year-over-year to 181.8 million MT.

Perhaps most aggressively, sugar trader Czarnikow boosted its 2025-26 global surplus estimate to 8.7 MMT in November, up +1.2 MMT from a September projection of 7.5 MMT. These accumulating surplus forecasts signal sustained pricing pressure in the near term, though some relief may emerge later. Covrig projects that the 2026-27 global surplus will narrow to just 1.4 MMT as weak prices discourage future production expansion.

USDA Forecasts Record Production Alongside Rising Consumption

The USDA’s December report laid out a scenario of record-setting volume across the supply chain. The agency projects global 2025-26 sugar production climbing +4.6% year-over-year to 189.318 MMT, while global human consumption rises +1.4% to 177.921 MMT. Despite consumption growth, production is outpacing demand, resulting in global sugar ending stocks falling only -2.9% year-over-year to 41.188 MMT.

The USDA’s Foreign Agricultural Service (FAS) anticipates Brazil’s 2025-26 production at 44.7 MMT (+2.3% year-over-year), India’s production at 35.25 MMT (+25% year-over-year driven by favorable monsoons and expanded acreage), and Thailand’s output at 10.25 MMT (+2% year-over-year). Each projection reinforces the picture of ample global supplies overwhelming demand.

Market Outlook: Pain Now, Potential Relief Ahead

The convergence of record production across multiple continents, export policy shifts in India, and multiple surplus forecasts from major trading organizations explains why London sugar and other futures remain under pressure. While some market participants monitor the possibility of reduced Brazilian output in 2026-27—Safras & Mercado expects a -3.91% decline to 41.8 MMT with sugar exports falling -11% year-over-year—such relief remains distant. For now, the structural oversupply and bearish forecasts continue to drain prices across major trading platforms, making this an environment where abundance, rather than scarcity, dominates market sentiment.