Global Sugar Glut: Why London Sugar Prices Continue to Face Headwinds in 2026

Commodity markets are sending a clear message: sugar remains under pressure. According to Barchart’s latest analysis, March NY world sugar #11 (SBH26) closed Monday up 0.06 cents (+0.41%), while March London ICE white sugar #5 (SWH26) declined 4.70 cents (-1.12%). Despite the weak dollar supporting New York prices, London sugar trading revealed a divergence in market sentiment—a telling sign of structural oversupply weighing on the market. The backdrop to these price movements tells a story of production abundance that shows no signs of abating.

Record Supply Surge Across Major Producing Nations

The fundamental challenge facing sugar traders is straightforward: the world is making too much sugar. Brazil, the global production leader, continues to expand output significantly. Conab raised its 2025/26 sugar production forecast to 45 MMT in early November, signaling that record harvest expectations remain intact. More notably, Brazil’s sugar mills have shifted their focus toward sweetener production rather than ethanol, with the cane-crushed-for-sugar ratio climbing to 50.82% in 2025/26 from 48.16% in the prior year.

India, the world’s second-largest sugar producer, has emerged as an even more aggressive supply driver. The India Sugar Mill Association (ISMA) reported a stunning 22% year-over-year surge in sugar output through mid-January, reaching 15.9 MMT. ISMA subsequently raised its full-season 2025/26 production estimate to 31 MMT—an 18.8% jump from the previous year. Critically, the association trimmed its estimate of sugar diverted to ethanol production from 5 MMT to 3.4 MMT, meaning substantially more Indian sugar will flow into export markets.

Thailand, the world’s third-largest producer and second-largest exporter, is also boosting supply. The Thai Sugar Millers Corp projected a 5% year-over-year increase in the 2025/26 crop to 10.5 MMT, adding another layer of global oversupply pressure.

Export Quotas Give Way to Market Flooding

India’s policy shift represents a watershed moment for global sugar markets. After introducing export quotas in 2022/23 following production shortfalls, India’s government has reversed course. The food ministry authorized 1.5 MMT of sugar exports in 2025/26, with further increments possible as domestic supply accumulates. This liberalization follows the government’s acknowledgment of a persistent domestic supply glut—a problem that higher production is only exacerbating.

Competing Forecasts All Point to Oversupply

Multiple international forecasters have quantified the supply challenge. The International Sugar Organization (ISO) projected a 1.625 million MT surplus for 2025-26, a dramatic reversal from the 2.916 million MT deficit in 2024-25. ISO attributed the swing to increased output in India, Thailand, and Pakistan, forecasting a 3.2% year-over-year rise in global production to 181.8 million MT.

Even more bearish, trading house Czarnikow raised its 2025/26 global surplus estimate to 8.7 MMT, up from 7.5 MMT projected just months earlier. The USDA’s December forecast proved no more optimistic, projecting global 2025/26 production would climb 4.6% to a record 189.318 MMT—far outpacing the 1.4% rise in human consumption to 177.921 MMT. This widening gap between production and demand consumption underscores why London sugar and other futures markets remain under pressure.

A Brief Respite Possible, But Not Soon

One modest bright spot exists on the horizon. Consulting firm Safras & Mercado projected that Brazil’s sugar production would decline 3.91% in 2026/27 to 41.8 MMT from 43.5 MMT expected in 2025/26. The firm also forecasted a 11% year-over-year drop in Brazilian sugar exports to 30 MMT. However, this reprieve remains 18 months away, offering little comfort to current market participants wrestling with today’s abundance.

Covrig Analytics offered a more nuanced outlook, raising its 2025/26 surplus estimate to 4.7 MMT but projecting the 2026/27 surplus would moderate to 1.4 MMT as weak prices discourage future plantings. This dynamic illustrates how commodity markets self-correct, though the adjustment process can be prolonged and painful for producers.

The Bottom Line for Sugar Trading

The sugar market faces a classic supply-side headwind: production incentives created by historically elevated prices have manifested into a supply glut just as those prices normalize. London sugar’s continued weakness relative to New York reflects the intensity of European and Asian supply pressures. Barchart’s commodity analysis suggests traders should expect sideways-to-lower price action until production intentions adjust to reflect current economics. The global supply surplus will gradually erode, but not before testing the patience—and positions—of market participants betting on a swift recovery.