Global Sugar Surplus Crushes US Sugar Prices Amid Record Harvests

US sugar prices continue to face significant headwinds as the world grapples with an oversupply situation. March NY sugar #11 futures (SBH26) climbed 0.07 cents (+0.48%) today, buoyed by dollar weakness, while March London ICE white sugar #5 (SWH26) retreated 4.00 points (-0.95%). Despite the modest gains on the New York contract, the fundamental backdrop remains bearish—a confluence of record global production and shifting trade policies is exerting sustained downward pressure on sugar prices worldwide.

Record Production from Major Sugar Exporters Floods the Market

Three of the world’s largest sugar producers are ramping up output to historic levels in the 2025-26 season, effectively capping any significant rally in US sugar price movements.

Brazil, the world’s largest sugar producer, continues to expand its sugar output. The Brazilian sugarcane industry association Unica reported that Brazil’s cumulative Center-South sugar production through December rose 0.9% year-over-year to 40.222 million metric tons (MMT). More significantly, mills have shifted more cane toward sugar production rather than ethanol—the ratio of cane crushed for sugar climbed to 50.82% in 2025-26 from 48.16% in the prior year. Brazil’s crop forecasting agency Conab projects the country will produce 45 MMT in 2025-26, marking a record high.

India’s surge is even more dramatic. The India Sugar Mill Association (ISMA) reported that India’s sugar output from October 1 through January 15 surged 22% year-over-year to 15.9 MMT. Encouraged by favorable monsoon conditions, ISMA has raised its full-year 2025-26 production forecast to 31 MMT, up 18.8% year-over-year—a jump from its earlier projection of 30 MMT. Notably, the ISMA also trimmed its estimate for sugar diverted to ethanol production from 5 MMT to 3.4 MMT, suggesting India could channel significantly more sugar into export channels.

Thailand, the world’s second-largest exporter, is also stepping up production. The Thai Sugar Millers Corp projected Thailand’s 2025-26 output will rise 5% year-over-year to 10.5 MMT, adding another layer of global supply pressure.

India’s Policy Reversal Opens Export Floodgates

One of the most consequential developments weighing on sugar prices has been India’s abrupt shift on export policy. After restricting sugar exports via quota systems introduced in 2022-23, India’s food ministry signaled in November that additional exports would be permitted to reduce domestic supply glut. The government authorized mills to export 1.5 MMT in the 2025-26 season—a signal that India is ready to unleash pent-up production onto world markets. This policy reversal is especially significant because India ranks as the world’s second-largest sugar producer, and its willingness to export more supply has become a key factor pressuring US sugar prices lower.

Competing Forecasts Reveal Wide Uncertainty Over Surplus Scale

Market participants and official agencies have published strikingly different estimates of the global sugar surplus, underscoring deep uncertainty about the true magnitude of oversupply.

The International Sugar Organization (ISO) offered a relatively conservative projection on November 17, forecasting a 1.625 million MT global sugar surplus for 2025-26—a sharp swing from a 2.916 million MT deficit in 2024-25. ISO attributes the surplus to stepped-up production in India, Thailand, and Pakistan, and projects global output will climb 3.2% year-over-year to 181.8 MMT.

By contrast, sugar trading firm Czarnikow painted a much gloomier picture, raising its 2025-26 global surplus estimate to 8.7 MMT in November—more than five times larger than ISO’s estimate. Czarnikow’s projection had swelled from a September estimate of 7.5 MMT, suggesting the surplus concern is broadening. Similarly, analytics firm Covrig Analytics boosted its 2025-26 global surplus estimate to 4.7 MMT in December, up from 4.1 MMT in October.

The USDA, in its December 16 report, projected that 2025-26 global sugar production would climb 4.6% year-over-year to a record 189.318 MMT, while consumption would rise just 1.4% to 177.921 MMT. The USDA forecasts global ending stocks will decline 2.9% year-over-year to 41.188 MMT—suggesting that while production is surging, the market is still absorbing some of the surplus into inventory.

The Silver Lining: Is Oversupply Self-Limiting?

Despite the near-term headwinds crushing sugar prices, there are early signs that the surplus may eventually self-correct. Consulting firm Safras & Mercado projected that Brazil’s sugar output will contract in 2026-27, falling 3.91% to 41.8 MMT from an expected 43.5 MMT in 2025-26. Brazil’s sugar exports are also expected to drop sharply, declining 11% year-over-year to 30 MMT in 2026-27. Covrig Analytics similarly projects that the 2026-27 global sugar surplus will shrink to just 1.4 MMT, as weak prices discourage continued production expansion.

This dynamic suggests that record US sugar prices weakness may be self-inflicted by the market—as oversupply crushes returns, producers in subsequent seasons will pull back planting and processing, setting the stage for a tighter market a year or two out.

What’s Next for US Sugar Prices?

The near-term outlook remains challenging for sugar bulls. Abundant global supplies, India’s export liberalization, and record production forecasts from the USDA all point to sustained downward pressure on sugar prices through at least the first half of 2026. While the dollar’s recent weakness has provided modest support to New York sugar prices, the fundamental supply overhang is likely to remain the dominant force.

Longer-term, the self-correcting nature of the sugar market—where low prices discourage future production—may eventually restore balance. But for now, investors in US sugar prices should brace for a prolonged period of weakness before any meaningful relief emerges.