Global Sugar Surplus Unleashes Price Collapse Across London and NY Markets

The sugar futures markets have experienced a dramatic downturn this week, with New York’s March contract (SBH26) sinking 2.99% and London ICE white sugar (SWH26) retreating 1.55%. The sell-off has pushed NY futures to their lowest levels in 2.5 months, while London prices have hit a 5-year nadir. Behind this sharp price deterioration lies a fundamental shift in the global supply picture, driven by surging production across major exporting nations and expanded export policies that are flooding international markets with excess inventory.

Brazil’s Record Output Overwhelms Trading Sentiment

Brazil stands at the center of the supply explosion, with the South-Center region’s 2025-26 production climbing to 40.222 MMT, reflecting a 0.9% year-over-year increase through December, according to Unica. More striking is the country’s shifting production mix: cane crushed specifically for sugar production has climbed to 50.82% from 48.16% in the prior season, signaling a deliberate pivot toward greater sugar output.

Looking ahead, Brazil’s government forecasting agency Conab raised its 2025-26 production estimate to 45 MMT in November, representing a strong 2.3% year-over-year increase that will push output to record levels. However, consulting firm Safras & Mercado projects some relief may come in subsequent seasons, forecasting a 3.91% decline in 2026-27 production to 41.8 MMT, which should provide modest support to prices down the line.

India’s Surge in Production Adds Pressure Across Global Exchanges

India’s production trajectory has proven even more bullish for supplies, with the India Sugar Mill Association (ISMA) reporting a 22% year-over-year production jump from October through mid-January to 15.9 MMT. The ISMA subsequently raised its full-season 2025-26 forecast to 31 MMT in November, representing an 18.8% surge compared to the prior year—driven by favorable monsoon conditions and expanded plantings.

Perhaps more significantly for traders tracking price action across Barchart and other market data platforms, India’s government has signaled a willingness to dramatically boost sugar exports. The food ministry approved 1.5 MMT of exports for the current season after the country had maintained strict export quotas since 2022-23. The ISMA has also trimmed its estimate for sugar diverted to ethanol production to 3.4 MMT from a prior 5 MMT forecast, freeing up additional volumes for overseas shipment and further pressuring international prices.

Thailand and Regional Producers Intensify Competitive Pressures

Thailand, the world’s third-largest producer and second-largest exporter, projects a 5% year-over-year increase in 2025-26 production to 10.5 MMT according to the Thai Sugar Millers Corp. When combined with smaller increases from Pakistan and other regional suppliers, the cumulative effect creates formidable headwinds for global price recovery.

Institutional Forecasts Predict Extended Period of Abundance

The magnitude of the supply overhang has prompted numerous forecasting agencies to dramatically expand their surplus estimates. Green Pool Commodity Specialists expects a global surplus of 2.74 MMT for 2025-26, while StoneX pegs the figure at 2.9 MMT. More bearishly, sugar trader Czarnikow raised its surplus forecast to 8.7 MMT, though the International Sugar Organization took a more measured approach with a 1.625 MMT surplus projection for 2025-26.

Perhaps most significantly, the USDA’s December report projected global production climbing 4.6% to a record 189.318 MMT while consumption rises only 1.4% to 177.921 MMT. This supply-demand divergence underscores why London market participants and traders following Barchart data have grown increasingly pessimistic. Global ending stocks are forecast to fall only 2.9% to 41.188 MMT despite the elevated production, suggesting abundant supplies will persist well into 2026-27.

One bright spot emerges from longer-term projections: Covrig Analytics notes that weak prices will eventually discourage further production investment, potentially shrinking the 2026-27 global surplus to 1.4 MMT as producers shift acreage to alternative crops. Yet that distant relief offers little comfort to those holding positions into the sustained abundance of the current season.