Global Sugar Prices Slide to Five-Year Lows Amid Persistent Supply Glut

World sugar markets are experiencing heightened weakness, with prices retreating to their lowest levels in over five years as abundant global supply continues to weigh heavily on sentiment. The downward momentum that has defined the past five months shows no signs of abating, driven by consistent expectations that the world will face significant surpluses in both the current and upcoming seasons. Sugar futures have been caught in a relentless sell-off, with NY world sugar #11 (SBH26) March contracts declining 0.06 points (0.43%) and London ICE white sugar #5 (SWH26) contracts sinking 8.20 points (2.12%) in recent sessions, underscoring persistent bearish sentiment.

Massive Supply Forecasts Pressuring Market Equilibrium

Multiple prominent forecasters have significantly scaled up their surplus estimates, painting a bleak picture for sugar price recovery. Czarnikow analysts project a global surplus of 3.4 million metric tons (MMT) for the 2026/27 season following an 8.3 MMT surplus in 2025/26. Green Pool Commodity Specialists anticipated a 2.74 MMT surplus for 2025/26 and a 156,000 MT surplus for 2026/27. StoneX has similarly flagged a 2.9 MMT global surplus for 2025/26. Most concerning, Covrig Analytics raised its global surplus estimate for 2025/26 to 4.7 MMT in December, and the International Sugar Organization (ISO) projects a surplus of 1.625 million MT for 2025/26—representing a dramatic swing from a deficit of 2.916 million MT in the prior year. Even more alarming, Czarnikow later revised its 2025/26 surplus upward to 8.7 MMT, underscoring how supply pressures continue to intensify.

Record Production from Top Exporters Floods Global Markets

The root cause of these unprecedented surpluses stems from surging production across the world’s largest sugar producers. Brazil, the global leader, is on track for record output in 2025/26. The Brazilian crop agency Conab raised its 2025/26 production forecast to 45 MMT in November, with the USDA Foreign Agricultural Service (FAS) expecting an even steeper climb to 44.7 MMT—representing a 2.3% year-over-year increase. The proportion of sugarcane allocated to sugar production has also risen, with Brazil’s Center-South region processing 50.78% of cane for sugar in 2025/26 versus 48.15% in the prior season, according to Unica data.

India, the world’s second-largest producer, is experiencing explosive production growth. The India Sugar Mill Association (ISMA) reported that output from October 1 to January 15 reached 15.9 MMT, a stunning 22% increase year-over-year. ISMA raised its full-season estimate to 31 MMT in November, an 18.8% jump from the previous year. The FAS expects India’s 2025/26 production to surge 25% to 35.25 MMT, fueled by favorable weather and expanded growing acreage. Crucially, ISMA also revised downward its estimate for sugar diverted to ethanol production to 3.4 MMT, freeing up significantly more sugar for potential export. The Indian government’s willingness to approve additional exports—having permitted 1.5 MMT for 2025/26 after lifting export quotas that had been in place since 2022/23—has added further downward pressure on global sugar prices.

Thailand, the world’s third-largest producer and second-largest exporter, is also contributing to supply pressures. The Thai Sugar Millers Corp forecasted a 5% year-over-year increase in 2025/26 output to 10.5 MMT, with the USDA projecting a more modest 2% gain to 10.25 MMT. Globally, the USDA’s most recent semiannual report projected record production of 189.318 MMT for 2025/26, a 4.6% year-over-year increase.

Market Signals Point to Potential Reversal Mechanics

Despite the dismal supply picture, one factor could provide a catalyst for sugar price recovery. Large fund positions have reached extremes that historically precede sharp reversals. As of February 3, fund managers had accumulated net short positions of 239,232 contracts in NY world sugar futures and options—the highest level recorded since 2006 records began. These massive short positions, increased by 57,104 contracts in recent weeks, represent significant short-covering potential should sentiment shift.

Looking further ahead, production dynamics may begin to ease. Safras & Mercado projected that Brazil’s 2025/26 sugar output of 43.5 MMT would decline by 3.91% to 41.8 MMT in 2026/27, while exports are forecast to contract by 11% year-over-year to 30 MMT. Covrig Analytics expects the global surplus to narrow to just 1.4 MMT in 2026/27 as lower sugar prices discourage new production investments. These dynamics suggest that while current sugar price weakness appears structural and lasting, the extreme supply forecasts combined with record short positioning could create asymmetric opportunities for contrarian traders monitoring the market’s next phase.