Sugar Rally Faces Reality Check: Global Surplus Expected to Hit 8.7 MMT in 2025/26

Sugar futures got a mild boost today—NY #11 up 0.34%, London #5 up 0.47%—riding on a weaker dollar and India’s plan to shift more sugarcane toward ethanol production. But here’s the catch: the sweet gains are masking a sourcing nightmare.

The Bearish Flood

The International Sugar Organization just dropped a bomb: they’re forecasting a 1.625 million MT surplus in 2025/26, a complete 180 from their August projection of a 231,000 MT deficit. Even wilder, sugar trader Czarnikow estimates the surplus could balloon to 8.7 MMT—up 1.2 MMT from just two months ago.

Why? Three words: Brazil, India, Thailand.

Brazil’s crushing it (literally). Conab raised 2025/26 output estimates to 45 MMT, with October Center-South production jumping +16.4% y/y to 2.068 MT. Sugar mills are allocating 46.02% of crushed cane to sugar, up from 45.91%—signals of an incoming sugar avalanche.

India’s bouncing back hard. After a brutal -17.5% y/y collapse in 2024/25 (down to 26.1 MMT), the India Sugar Mill Association now forecasts 31 MMT for 2025/26—an +18.8% y/y jump. Abundant monsoon rains (937.2 mm, 8% above normal) are fueling a bumper crop. Some estimates peg it at 34.9-35.3 MMT. The kicker? The ISMA slashed ethanol diversion estimates from 5 MMT to 3.4 MMT, freeing up more sugar for export.

Thailand staying steady. The Thai Sugar Millers Corp projects 2025/26 output at 10.5 MMT (+5% y/y), reinforcing their position as the world’s second-largest exporter.

The Numbers That Matter

• Global production (2025/26): ISO forecasts 181.8 MMT (+3.2% y/y); USDA says 189.3 MMT (+4.7% y/y)—potentially a record.
• Global consumption: USDA projects 177.9 MMT (+1.4% y/y)—can’t keep up with supply.
• Ending stocks: USDA forecasts 41.188 MMT (+7.5% y/y)—inventory pile is only growing.
• India’s export quota: Capped at 1.5 MMT for 2025/26, down from 2 MMT expectations. Not enough to absorb the production surge.

The Headwinds

Sugar prices have already tanked. On November 13, London sugar hit a 4.75-year low; NY sugar slumped to a 5-year low on November 6. Today’s modest gains are just consolidation noise—the structural trend remains bearish until production finally normalizes.

The real story? Global sugar is swimming in supply, and it’s only getting worse. Even a weaker dollar and India’s ethanol gambit can’t paper over the fact that the market is drowning in output.