Global Sugar Glut Deepens, Sending Prices to Multi-Year Lows
Global sugar markets extended their sharp decline this week, with prices for key benchmarks plunging to multi-month and multi-year lows. The sell-off reflects a mounting consensus among analysts and trade bodies that the world is heading for a significant supply surplus in the coming seasons, pressuring prices downward.
In New York, the March raw sugar contract (SBH26) fell 2.99% to settle at a 2.5-month low. Meanwhile, in London, the benchmark white sugar futures (SWH26) dropped 1.55%, touching their weakest level in five years.
The driving force behind the slump is a wave of upgraded production forecasts from the world's top growers. Industry consultant Green Pool now projects a global surplus of 2.74 million metric tons (MMT) for the 2025/26 season, followed by a smaller surplus in 2026/27. This view was echoed by StoneX, which anticipates a 2.9 MMT surplus next season.
"The numbers from Brazil and India are simply overwhelming the market," said a veteran soft commodities trader in London. "After years of tightness, we're seeing a decisive shift in the fundamental picture."
In Brazil, the world's largest producer, industry group Unica reported that cumulative sugar output in the key Center-South region through December was up 0.9% year-on-year. More tellingly, mills are allocating a larger share of cane to sugar production rather than ethanol, a trend that boosts sugar availability.
Perhaps more impactful for global trade flows are developments in India, the second-largest producer. The Indian Sugar Mills Association (ISMA) reported a 22% year-on-year jump in production for the early part of the 2025/26 season and has raised its full-season forecast to 31 MMT. Crucially, ISMA also slashed its estimate for sugar diverted to ethanol, freeing up an additional 1.6 MMT that could potentially be exported. Indian government officials have hinted at allowing more exports to manage domestic stocks, a move that would add significant volume to an already well-supplied world market.
"The prospect of meaningful Indian exports returning is a game-changer," noted agricultural economist Dr. Anya Sharma. "It removes a key support that the market had relied on during recent deficit years and opens the door for much heavier global inventories."
Other major producers are contributing to the bearish outlook. Thailand, the world's third-largest producer, expects a 5% larger crop. The International Sugar Organization (ISO) points to increased output in Pakistan and Thailand as key factors in shifting the global balance from a deficit in 2024/25 to a surplus of 1.625 MMT in 2025/26.
While the near-term outlook is dominated by surplus projections, some analysts see a potential floor forming for later years. Consultancy Safras & Mercado predicts Brazilian production and exports will decline in the 2026/27 season, as sustained low prices discourage planting and investment. Covrig Analytics also forecasts the global surplus will shrink significantly by 2026/27.
Market Voices: Trader Reactions
Michael Chen, Portfolio Manager at Helios Capital: "This is a classic commodity cycle playing out. High prices cured high prices by incentivizing massive production. The focus now shifts to how low prices need to go to start shutting off that supply tap, particularly in high-cost regions."
Sarah Wilkinson, Analyst at AgriFocus Consultants: "The data is clear, but we must watch weather patterns closely. A poor monsoon in India or drought in Brazil could tighten the balance sheet faster than anyone expects. The market is pricing in perfection across all major growing regions."
David Rossi, Independent Commodity Trader: "It's a bloodbath, and it's entirely predictable. For years, governments and agencies pushed for more sugar production for energy security. Now we have a mountain of the stuff, and farmers are going to get crushed. The so-called 'experts' who encouraged this overexpansion should be held accountable for the boom-bust cycle they've created."
Eleanor Vance, Head of Softs Research at Sterling Bank: "The surplus narrative is firmly in the driver's seat. However, with prices at these levels, we're likely to see increased consumption elasticity and stronger demand from the industrial and ethanol sectors. The USDA's consumption forecast of a record 177.9 MMT suggests the demand floor is rising."
On the date of publication, the author did not have positions in any securities mentioned. This article is for informational purposes only and was based on reporting from Barchart.com and other industry sources.