The global sugar market is facing a significant downturn as weak demand and ample supplies drive prices to multi-year lows. A combination of factors, including favorable weather conditions in major producing countries and changes in consumer behavior, has led to a surplus in the market. Brazil and India, two of the world’s leading sugar producers, have reported higher-than-expected yields, contributing to the global glut.
The increased production has outpaced current consumption rates, putting downward pressure on prices. On the demand side, health-conscious trends have prompted many consumers to reduce their sugar intake, while ongoing economic uncertainties have dampened purchasing power in key markets. These factors have further exacerbated the oversupply situation.
As the July NY world sugar #11 futures contract expired on Monday, prices retreated to a 4-1/4 year nearest-futures low. Concerns about a large delivery of sugar ahead of the contract’s expiration have led to the liquidation of positions, accelerating the price decline. Commodities trader Czarnikow has projected a 7.5 MMT global sugar surplus for the 2025/26 season, the largest surplus in 8 years.
Global sugar market downturn
The USDA has also forecasted record global sugar production of 189.318 million metric tons (MMT) for the same period, with ending stocks expected to rise 7.5% year-over-year to 41.188 MMT. India’s National Federation of Cooperative Sugar Factories has projected a 19% year-over-year increase in the country’s 2025/26 sugar production, reaching 35 MMT.
Forecasts for abundant rainfall in India could further boost the sugar crop, adding to the bearish sentiment in the market. Despite the overall surplus, there are some factors providing support to sugar prices. Brazil, the world’s largest sugar producer, has seen a decline in its 2024/25 sugar production due to lower sugarcane yields caused by drought and excessive heat.
Additionally, the International Sugar Organization (ISO) has raised its 2024/25 global sugar deficit forecast to a 9-year high of 5.47 MMT, indicating a tightening market following the 2023/24 surplus. Looking ahead, the 2025/26 season is expected to see a significant rebuild of global sugar stocks, with production potentially reaching 185.9 million tonnes, the second-highest on record. However, global sugar consumption is projected to decline gradually, influenced by factors such as food price inflation, increased health awareness, and the rising impact of GLP-1 receptor agonist drugs like Ozempic and Zepbound.
Economists and industry experts anticipate that the sugar market will remain under pressure unless there is a significant shift in production levels or consumer demand. Stakeholders are advised to closely monitor market trends and consider strategic adjustments to navigate the challenging market conditions.
