Global Sugar Glut Fears Deepen, Sending Prices to Multi-Year Lows
Fears of a mounting global sugar surplus intensified this week, sending futures prices sharply lower. On Friday, the March contract for New York raw sugar (SBH26) settled down 2.93%, hitting its lowest point in two and a half months. Meanwhile, London white sugar (SWH26) fell 1.72%, plunging to a five-year low.
The sell-off was fueled by a cascade of forecasts pointing to ample supplies in the coming seasons. Analysts at Green Pool Commodity Specialists projected a global surplus of 2.74 million metric tons (MMT) for the 2025/26 season, with a smaller surplus following in 2026/27. StoneX echoed this bearish sentiment, estimating a 2.9 MMT surplus for 2025/26.
The outlook is being shaped by powerhouse producers. In Brazil, the world's largest sugar producer, industry group Unica reported that cumulative output in the key Center-South region through December was up 0.9% year-on-year. More cane is also being allocated to sugar production over ethanol.
Adding to the pressure, India—the second-largest producer—is poised to export more. The India Sugar Mill Association (ISMA) reported a 22% year-on-year jump in production for the early part of the 2025/26 season and recently raised its full-season forecast. Crucially, ISMA also slashed its estimate for sugar diverted to ethanol, freeing up millions of tons for the global market. This shift comes as the Indian government considers additional export permits to manage domestic stockpiles.
"The market is being overwhelmed by data," said Michael Vance, a veteran softs trader in London. "Between Brazil's relentless output, India's potential export wave, and strong numbers from Thailand, the narrative has decisively shifted from deficit to surplus. The price reaction is logical, if painful for producers."
Other agencies reinforce the view. The International Sugar Organization (ISO) forecasts a surplus of 1.625 MMT for 2025/26, a stark reversal from the previous season's deficit. Czarnikow, a leading trader, holds one of the most bullish surplus estimates at 8.7 MMT.
However, some analysts see a potential floor forming. Consulting firm Safras & Mercado projects Brazilian sugar output and exports will decline in the 2026/27 season, as current low prices begin to discourage production. Covrig Analytics also expects the global surplus to shrink significantly by 2026/27.
"This is a short-sighted panic," argued Sarah Chen, an analyst at an agricultural hedge fund, her tone sharp. "The market is only looking at the next six months. These prices will devastate margins for smaller producers worldwide and plant the seed for the next supply crunch. Everyone is cheering cheap sugar today without seeing the storm it creates for tomorrow."
David Miller, a procurement manager for a multinational food company, offered a more measured perspective: "For end-users, this is welcome relief after years of high input costs. It provides some budgeting certainty. The key question is how governments in India and Thailand will respond—if they support their farmers through this period, it could prolong the surplus scenario."
The USDA's latest report encapsulates the dichotomy: it forecasts record global production and consumption for 2025/26, but also predicts a drawdown in ending stocks. The path forward for sugar prices will hinge on whether consumption can keep pace with the current harvest boom and how producers adjust to the new price environment.
On the date of publication, the author had no positions in any securities mentioned. This article is for informational purposes only.