Global Sugar Price Decline Reshapes Pakistan Market Outlook

The worldwide sugar market is experiencing a significant downturn, with prices reaching multi-year lows and fundamentals pointing to continued pressure ahead. For sugar price observers in Pakistan today, these global dynamics carry particular significance as the country navigates its position within an increasingly oversupplied international market.

March Contracts Show Weakness Amid Surplus Projections

March contracts for New York world sugar #11 (SBH26) declined by 0.02 points (-0.14%) recently, while March London ICE white sugar #5 (SWH26) fell by 1.60 points (-0.39%). This latest movement reflects a broader bearish trend that has gripped sugar markets, with New York sugar trading at its lowest level in approximately 2.5 months and London sugar hitting five-year lows.

The weakness stems from mounting expectations of abundant global supplies in the coming season. Multiple forecasting entities have raised alarm bells about oversupply conditions. Green Pool Commodity Specialists projected a worldwide sugar surplus of 2.74 million metric tons (MMT) for the 2025/26 season, with an additional 156,000 metric tons surplus anticipated for 2026/27. StoneX offered a similarly bearish outlook, forecasting a 2.9 MMT global surplus for 2025/26.

More recent analyses suggest even larger surpluses. Covrig Analytics elevated its 2025/26 global surplus estimate to 4.7 MMT (up from 4.1 MMT), while Czarnikow raised its forecast to 8.7 MMT. These mounting surplus projections continue to weigh on sugar price sentiment globally, creating headwinds for producers worldwide, including those in Pakistan.

Major Producers Boost Output, Intensifying Price Pressure

The primary driver of global sugar oversupply is robust production growth across key producing nations. Brazil, the world’s largest sugar producer, is on track for record output. Conab, Brazil’s crop forecasting agency, increased its 2025/26 production estimate to 45 MMT in November, representing substantial year-over-year growth. The country’s Center-South region produced 40.222 MMT of sugar through December 2025, marking a 0.9% increase compared to the previous year.

India, the world’s second-largest sugar producer, is delivering even more dramatic production increases. The India Sugar Mill Association (ISMA) reported that India’s sugar output from October 1 to January 15 for the 2025-26 season reached 15.9 MMT—a 22% year-over-year surge. ISMA subsequently revised its full-season 2025/26 forecast upward to 31 MMT, representing an 18.8% increase from its prior estimate of 30 MMT. Notably, ISMA reduced its projection for sugar allocated to ethanol production from 5 MMT to 3.4 MMT, potentially freeing up more sugar for export markets and further pressuring global prices.

Expectations for increased Indian sugar exports to international markets have created additional downward pressure. The Indian government’s indication that it may authorize additional export volumes to address domestic oversupply adds another layer of bearish sentiment.

Thailand, ranking as the world’s third-largest sugar producer and second-largest exporter, is also contributing to rising global supply. The Thai Sugar Millers Corp forecasted a 5% year-over-year production increase for the 2025/26 crop, reaching 10.5 MMT.

Pakistan’s Sugar Market Position in a Surplus-Driven World

The implications of this global surplus environment extend directly to sugar price dynamics in Pakistan. As a significant regional consumer and occasional exporter, Pakistan’s domestic sugar market operates within the context of these international price pressures. With multiple major producers simultaneously ramping up output, Pakistan faces incoming supply pressure that will likely constrain local sugar prices and margins for producers.

The country’s sugar industry must contend with both the glut of exportable supply from South Asian peers (particularly India) and the broader global oversupply conditions. This creates a challenging environment where domestic sugar price recovery faces headwinds from international market forces.

USDA Forecasts Record Production, Price Recovery Unlikely Soon

The United States Department of Agriculture (USDA) delivered a comprehensive market assessment on December 16, projecting global sugar production for 2025/26 to reach a record 189.318 MMT—a 4.6% year-over-year increase. The USDA anticipates global human sugar consumption will also hit new highs at 177.921 MMT (up 1.4% year-over-year), but production growth is significantly outpacing demand growth.

This supply-demand imbalance suggests that global sugar price weakness may persist. The USDA forecasts global ending sugar stocks for 2025/26 to decline only marginally by 2.9% to 41.188 MMT, reflecting the ongoing surplus accumulation.

Regional production outlooks underscore the oversupply narrative:

• Brazil: The FAS projects a 2.3% output increase to a record 44.7 MMT
• India: Production is expected to surge 25% to 35.25 MMT due to favorable monsoon conditions
• Thailand: Sugar output projected to grow 2% to 10.25 MMT

These simultaneous production surges across the world’s largest exporters signal that international sugar price recovery may remain elusive in the near term. For Pakistan’s sugar market participants, this global backdrop suggests that sugar price pressures will likely persist throughout 2026, creating ongoing challenges for the domestic industry.

Market Outlook: Structural Surplus Conditions Ahead

Looking beyond 2025/26, the International Sugar Organization (ISO) projects a global surplus of 1.625 million MT for the season, following a deficit of 2.916 million MT in the prior year. This marks a significant swing from deficit to surplus, a structural shift that will influence sugar price trajectories across all markets, including Pakistan.

However, some analysts project relief further ahead. Safras & Mercado anticipated that Brazil’s sugar production would decline 3.91% to 41.8 MMT in 2026/27 (from 43.5 MMT in 2025/26), with sugar exports falling 11% year-over-year to 30 MMT. Should such production declines materialize among key suppliers, global sugar prices could eventually find support.

In the near term, however, multiple forecasters agree that global supply abundance will continue to constrain sugar price recovery, keeping downward pressure on markets across Asia, including Pakistan. The convergence of record production forecasts, expanding export availability, and rising global stocks creates a powerful headwind against significant sugar price appreciation through at least mid-2026.