Global Sugar Glut Sends Prices Tumbling to Multi-Year Lows

New York and London sugar futures continued their downward trajectory this week, pressured by mounting evidence of a substantial global surplus. The March contract for world sugar #11 (SBH26) edged lower, while London ICE white sugar #5 (SWH26) slumped to a level not seen in five years.

The sell-off is fueled by consecutive reports from major producers pointing to bumper crops. In Brazil, the world's top exporter, industry group Unica reported that cumulative sugar output for the 2025-26 season is running ahead of last year's pace. More tellingly, mills are allocating a larger share of cane to sugar production over ethanol, a direct response to favorable pricing signals earlier in the season.

Meanwhile, in India—the second-largest producer—the sugar output for the current season has surged, according to the Indian Sugar Mills Association (ISMA). This robust production, coupled with a government decision to divert less sugar to ethanol, is raising market expectations that New Delhi may authorize additional exports to manage domestic stockpiles. Such a move would inject more supply into an already well-supplied global market.

Analyst forecasts have crystallized the bearish outlook. Firms like Green Pool and StoneX have recently issued projections for a global sugar surplus in the 2025/26 season, ranging from 2.7 to 2.9 million metric tonnes. The International Sugar Organization (ISO) also pivoted from predicting a deficit to forecasting a surplus, citing increased production in India, Thailand, and Pakistan.

"The market is drowning in data, and every new point is bearish," said Michael Vance, a commodities strategist at Agrinomics Consultancy. "The combination of Brazil's relentless output, India's potential to export, and Thailand's recovery is creating a perfect storm of supply. Prices are searching for a floor that will finally discourage some of this production."

While the immediate horizon appears saturated, some analysts see a potential tightening further out. Consultancy Covrig Analytics, while raising its 2025/26 surplus estimate, projects a significantly smaller surplus for the 2026/27 season, as persistently low prices are expected to curb planting and production incentives. Similarly, Safras & Mercado predicts a drop in Brazilian sugar output and exports for the following season.

"This is short-term pain for a long-term gain," commented Priya Sharma, a portfolio manager focused on soft commodities. "Current prices are unsustainable for many producers. We're likely seeing the setup for a tighter market in 2026/27, but for now, the bears are firmly in control."

However, the prevailing sentiment remains deeply negative. The USDA's latest report added to the weight, projecting record global production and consumption, but with output growth far outstripping demand growth. The sheer scale of the anticipated surplus has overwhelmed the market.

"It's an absolute farce of planning and greed," argued David Keller, a veteran trader speaking bluntly. "Every producer saw high prices and planted fence-to-fence. Now they're all rushing to dump sugar onto the market at the same time, crushing the price. The so-called 'analyst forecasts' are just chasing the market down. Consumers might cheer, but this volatility wrecks supply chains."

For buyers, the supply glut offers relief from the high food inflation seen in recent years. For producers and traders, the focus is now on how low prices must go to balance the market and which high-cost regions will be forced to cut back first.

On the date of publication, the author did not have positions in any securities mentioned. This article is for informational purposes only.