Sugar Prices Sink to Multi-Year Lows as Global Glut Deepens

Sugar markets remained under heavy pressure on Monday, with prices languishing near multi-year lows as analysts and industry groups painted a picture of a growing global surplus. The March raw sugar contract (SBH26) on ICE Futures U.S. closed marginally lower, while London white sugar (SWH26) eked out a small gain after a technical rebound from deeply oversold conditions.

The dominant narrative remains one of ample supply. Leading commodity analysts have consistently revised their surplus forecasts upward for the upcoming 2025/26 season. Green Pool anticipates a surplus of 2.74 million metric tons (MMT), while StoneX projects nearly 2.9 MMT. More strikingly, trader Czarnikow in November boosted its estimate to 8.7 MMT, signaling a potentially massive oversupply.

This bearish shift follows years of tightness. The International Sugar Organization (ISO) notes the market is swinging from a deficit of nearly 2.9 MMT in 2024/25 to a projected surplus of 1.6 MMT in 2025/26. "The pendulum has swung decisively," said market analyst Claudia Rossi. "After periods of scarcity driven by weather and policy, we're now seeing a coordinated production response from the big three exporters."

Data from key producers confirms the trend. Brazil's Center-South region, the world's largest sugar-producing area, reported a 0.9% year-on-year increase in cumulative output through December, with mills allocating more cane to sugar over ethanol. Conab has raised its forecast for Brazil's total 2025/26 production to 45 MMT.

Perhaps the most significant bearish factor is the situation in India, the world's second-largest producer. The India Sugar Mills Association (ISMA) reports output from October to mid-January is up a staggering 22% year-on-year. ISMA has raised its full-season production estimate to 31 MMT. Crucially, the group has also slashed its estimate of sugar diverted to ethanol production, freeing up millions of tons for potential export. After imposing quotas in recent years, the government is now considering allowing additional exports to manage domestic stocks, a move that would add more sugar to an already flooded global market.

Thailand, the third-largest producer and second-largest exporter, is also contributing, with its Sugar Millers Corp projecting a 5% output increase for 2025/26.

While the near-term outlook is overwhelmingly bearish, some analysts see a potential floor forming for later years. Covrig Analytics projects the global surplus will shrink to 1.4 MMT in 2026/27 as low prices discourage production. Similarly, consulting firm Safras & Mercado forecasts a 3.9% drop in Brazil's sugar output for 2026/27, with exports expected to fall 11%.

"The market is pricing in a tsunami of sugar for the next 12-18 months," said David Chen, a portfolio manager focused on soft commodities. "The risk, however, is that at these price levels, you start to sow the seeds of the next deficit cycle. Margins are getting squeezed, and investment in future crops will suffer."

Market Voices: Trader Reactions

Michael Torres, Commodity Broker: "The technical bounce was expected, but the fundamentals haven't changed. Every agency report adds to the surplus narrative. Until we see concrete cuts to planting intentions or a major weather event, rallies will be sold."

Sarah Jenkins, Agricultural Economist: "This is a classic commodity cycle. High prices cured high prices. The policy shift in India on ethanol is a key variable no one fully priced in a year ago. It's a major bearish shock to the export market."

Raj Patel, Independent Trader (Sharply Critical): "It's a farce. These forecasts keep getting bigger every month. First it was a small surplus, now some are talking 8 million tons? The data feels manic and designed to drive prices into the ground. Someone is going to get caught short when reality—and weather—inevitably bite back."

Elena Costa, Sustainability Analyst: "The price crash presents a paradox. While consumers may benefit briefly, it threatens the economic viability of sustainable cane farming. The pressure to cut costs could lead to negative environmental and social outcomes in producing regions."

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