Analysts Forecast Another Season of Surplus
Two major research groups reinforced the bearish outlook late last week. Green Pool Commodity Specialists projected a global surplus of 2.74 million metric tons (MMT) for the 2025/26 season, followed by a more modest 156,000-ton overhang in 2026/27. StoneX offered a similar assessment, placing the 2025/26 surplus at 2.9 MMT. The announcements added to existing downward momentum by underscoring expectations that production growth will outstrip demand growth for a second straight season.
A separate update from Covrig Analytics on 12 December expanded its own 2025/26 surplus estimate to 4.7 MMT, up from 4.1 MMT in October. Covrig anticipates a smaller 1.4 MMT surplus in 2026/27, reasoning that sustained low prices could discourage marginal producers from maintaining current output levels. The firm nevertheless cautioned that any supply contraction is unlikely to materialise before the second half of 2026, leaving the near-term balance decidedly heavy.
Brazil Maintains Record-High Crush Pace
Production data from Brazil, the world’s largest sugar exporter, continue to confirm robust output. Industry association Unica reported on 21 January that mills in the Centre-South region—responsible for roughly 90 percent of the country’s sugar output—processed 40.222 MMT of sugar from the start of the 2025/26 campaign through December, a year-on-year increase of 0.9 percent. During the same period, 50.82 percent of available cane was diverted to sugar manufacture, compared with 48.16 percent a year earlier. The higher sugar mix reflects attractive export premiums and government incentives that have recently favoured crystal sugar over ethanol production.
Good weather across Brazil’s traditional cane belt has also supported both sucrose content and crushing efficiency. As a result, traders expect Centre-South factories to sustain a strong pace well into the first quarter of 2026, extending availability of exportable supplies and capping any near-term price recovery.
India Signals Additional Exports as Stocks Grow
India, the second-largest producer and traditionally a swing exporter, is likewise on track for an ample harvest. On 19 January the Indian Sugar Mills Association (ISMA) said mills produced 15.9 MMT of sugar between 1 October and 15 January, up 22 percent from the corresponding period of the previous year. In November the group lifted its full-season production forecast to 31 MMT, an 18.8 percent rise versus 2024/25.
At the same time, ISMA revised downward the volume of cane juice earmarked for ethanol blending to 3.4 MMT, compared with 5 MMT projected in July. The change could leave an additional 1.6 MMT available for the sugar market, strengthening the case for larger exports. India’s food ministry has already authorised shipments of 1.5 MMT for the 2025/26 cycle under a quota system introduced in 2022/23, and Food Secretary Sanjeev Chopra has indicated that further allocations are possible should domestic inventories remain comfortable.
An uptick in Indian exports would add to the pressure on global prices by providing refiners and consumptive markets in Asia, the Middle East and Africa with alternatives to Brazilian raws. As of late January, Indian 45 ICUMSA whites were quoted competitively against Thai and European product, raising expectations that new trade flows could emerge once government clearances are issued.
Imagem: Internet
Technical Factors Provide Brief Support
Monday’s modest bounce in London futures was linked primarily to oversold conditions rather than a change in underlying fundamentals. Commitments of Traders data suggest that managed-money accounts have built the largest net-short position in white sugar since 2021, leaving the market vulnerable to periodic short covering. However, analysts noted that rallies are likely to encounter scale-up hedging from producers eager to lock in margins after the recent decline.
Volatility has also been amplified by thin liquidity during Asia-Pacific hours and algorithmic trading strategies that react to intraday shifts in energy, softs and grain complexes. Market participants continue to monitor the Brazilian real and Indian rupee for currency-driven export incentives, as well as Brent crude oil futures given the link between energy prices and ethanol parity for cane processors.
Macroeconomic Context
The broader commodity space offered limited support. Crude oil was largely steady, while metals declined on U.S. dollar strength. Arabica coffee futures, which share logistical and weather-related risk factors with sugar, registered gains on their own round of short covering, but the move failed to translate into allied interest for sugar contracts.
According to the Food and Agriculture Organization of the United Nations, world sugar consumption is projected to grow by roughly 1.3 percent annually, a pace insufficient to absorb the incremental supply now expected from major producers. Unless adverse weather events or policy shifts alter the outlook, analysts say the market may need to drop further to trigger meaningful production cuts in the next planting cycle.
Outlook
With Brazil’s harvest momentum intact and India preparing to release additional volumes, attention now turns to Thailand—traditionally the world’s second-largest exporter—which has faced weather-related challenges in recent years. Early field surveys suggest modest recovery, but definitive production figures will not be available until late in the first quarter. In the interim, any relief rally in futures is expected to encounter headwinds from the sizeable bullish consensus on supply.
Covrig Analytics’ longer-term projection of a smaller 1.4 MMT surplus in 2026/27 offers a potential pivot point, but that scenario would require producers to respond to current price signals by reducing area or switching to more profitable crops. For now, both physical indicators and forward-looking estimates point to another year of abundant sugar, keeping speculative and commercial pressure firmly on the downside.
Crédito da imagem: Artefacti via iStock
