India's Surging Sugar Production Reshapes Global Market Outlook

The global sugar market is navigating a challenging landscape as production levels reach record highs, driven significantly by India’s dramatic output expansion. With India’s sugar production in india surging to unprecedented levels, the world’s second-largest sugar producer is fundamentally altering supply dynamics and pressuring prices across major trading hubs. March NY world sugar #11 (SBH26) closed up +0.06 (+0.41%) on Monday, while March London ICE white sugar #5 (SWH26) declined -4.70 (-1.12%), reflecting the complex forces at play in commodity markets.

India Sugar Production Reaches Record High, Transforming Supply Dynamics

India’s role in the global sugar market has become increasingly critical as the country dramatically expands its production capacity. The India Sugar Mill Association (ISMA) reported that India’s 2025-26 sugar output from October 1 to January 15 reached 15.9 MMT, representing a striking +22% increase year-over-year. Even more significantly, the ISMA raised its full-season 2025/26 India sugar production estimate to 31 MMT in November, up from a previous forecast of 30 MMT—an impressive +18.8% jump compared to the prior year.

This exceptional growth in sugar production in India stems from favorable monsoon conditions and expanded sugar acreage. The country has also strategically reduced its sugar allocation for ethanol production, cutting the estimate from 5 MMT to 3.4 MMT, which redirects additional supply toward exports. As the second-largest global producer, India’s production decisions carry outsized influence on international prices and supply balances.

The USDA’s Foreign Agricultural Service (FAS) projects an even more optimistic trajectory, forecasting that India’s 2025/26 sugar production will increase by 25% year-over-year to reach 35.25 MMT. This trajectory underscores the transformative nature of India’s current expansion cycle and its potential to reshape market fundamentals for years to come.

Export Policy Shifts Support India Sugar Expansion

Government policy has become a critical enabler of India’s production surge. The government approved the export of 1.5 MMT of sugar during the 2025/26 season, marking a significant policy reversal. This decision follows India’s introduction of a quota system for sugar exports in 2022/23, which was implemented after late monsoon rains had constrained production and limited domestic availability.

The shift toward allowing additional exports reflects efforts to manage a domestic supply glut and prevent price collapse in the domestic market. India’s food secretary indicated that the government may permit further export expansions, signaling a structural change in the country’s approach to sugar trade. This policy flexibility positions India as an increasingly aggressive exporter, potentially displacing other suppliers in global markets.

Brazil and Thailand Boost Production, Compounding Oversupply Concerns

While India leads production expansion, other major producers are simultaneously ramping up output. Brazil, the world’s largest sugar producer, continues to increase its crushing operations. The Brazilian sugarcane trade association Unica reported that cumulative 2025-26 Center-South sugar output through December rose +0.9% year-over-year to 40.222 MMT, with the ratio of cane crushed for sugar climbing to 50.82% in 2025/26 from 48.16% in 2024/25.

Conab, Brazil’s crop forecasting agency, raised its 2025/26 sugar production estimate to 45 MMT in November, up from 44.5 MMT previously. The USDA’s FAS projects Brazil’s 2025/26 production at a record 44.7 MMT, representing a +2.3% year-over-year increase.

Thailand, the world’s third-largest producer and second-largest exporter, is also expanding. The Thai Sugar Millers Corp projected a +5% year-over-year increase in Thailand’s 2025/26 sugar crop to 10.5 MMT. The USDA estimates Thailand’s production at 10.25 MMT, up +2% year-over-year.

Global Surplus Forecast Signals Continued Price Pressure

The convergence of rising output from multiple producers has created a pronounced surplus situation in global markets. The International Sugar Organization (ISO) forecasted a 1.625 million MT sugar surplus in 2025-26 on November 17, a sharp reversal from a 2.916 million MT deficit in 2024-25. ISO projects global sugar production rising +3.2% year-over-year to 181.8 million MT in 2025-26, driven by increased output in India, Thailand, and Pakistan.

Covrig Analytics raised its 2025/26 global sugar surplus estimate to 4.7 MMT in December, up from 4.1 MMT in October. Sugar trader Czarnikow boosted its estimate even higher to 8.7 MMT in November, suggesting the potential for even more pronounced oversupply conditions.

However, the medium-term outlook shows some moderation. Covrig projects that the 2026/27 global surplus will narrow to 1.4 MMT as weak prices discourage future production investment. Consulting firm Safras & Mercado predicted that Brazil’s sugar production in 2026/27 will decline -3.91% to 41.8 MMT from the expected 43.5 MMT in 2025/26, with Brazilian exports falling -11% year-over-year to 30 MMT.

USDA’s Production Forecasts Paint Picture of Market Imbalance

The USDA, in its December 16 bi-annual report, offered the most comprehensive outlook for global market dynamics. The agency projected that global 2025/26 sugar production would climb +4.6% year-over-year to a record 189.318 MMT, while global human sugar consumption would increase only +1.4% year-over-year to a record 177.921 MMT. This significant gap between production and consumption growth illustrates the fundamental supply-demand imbalance.

The USDA also forecasted that 2025/26 global sugar ending stocks would fall -2.9% year-over-year to 41.188 MMT despite record production, suggesting that even with elevated surplus levels, global inventory positions remain constrained. This contradiction reflects the structural nature of the current imbalance and the persistent challenges facing price discovery in sugar markets.

The convergence of India’s record expansion, Brazil’s continued output growth, and Thailand’s production increases creates a formidable supply environment that will likely continue pressuring prices throughout the 2025-26 season and into 2026-27.