Global Sugar Surplus Expected to Deepen in 2025/26, Says Hedgepoint

Every year, Hedgepoint Global Markets’ Market Intelligence team releases detailed reports on global outlooks for key agricultural commodities, analyzing supply, demand, weather, international trade, and price dynamics. Throughout the blog, you can already find content dedicated to different markets — and in this 2026 special, we gather the main insights for coffee, sugar, grains, and cocoa, highlighting trends expected to shape these sectors in the coming months. 

The reports were prepared by Hedgepoint specialists who monitor the evolution of these markets daily. In the sugar and ethanol market, the report is led by Lívea Coda, Market Intelligence Coordinator at Hedgepoint, who analyzes global trade flows, the sugar–ethanol balance, and the effects of energy decisions on international prices. 

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According to Hedgepoint Global Markets, the global sugar balance for October–September 2025/26 is expected to remain in surplus, supported by strong availability from Brazil and recoveries in India, Thailand, and Mexico. Global demand continues to grow, but not enough to absorb higher production — especially amid persistent economic uncertainties — exerting pressure on sugar prices, which have reached their lowest levels in at least five years. 

The most economical mechanism to absorb the expected surplus would be an expansion of ethanol demand in Brazil’s domestic market — note that this does not imply any change to our forecast for Otto Cycle growth (2.5% in CS), but rather a shift in fuel demand share. To restore the competitiveness of hydrous ethanol at gas stations across most states, we estimate that ex-mill prices would need to fall from the current R$ 3.0/liter to approximately R$ 2.3/liter (tax-free). 

In this scenario, the implicit sugar price floor would be close to 13.5 c/lb. In a surplus year, prices should gravitate toward this level as the market attempts to rebalance excess sugar availability through ethanol consumption. 

Carlos Murilo Barros de Mello, Head of Sugar, highlights more constructive short-term price signals, such as the impact of the Middle East conflict on oil and, indirectly, ethanol prices; a potential reduction in Indian production and exports; expectations of a more ethanol-focused start to the CS Brazil crop; and the possibility of an El Niño event from August onward. 

However, any sugar price rally would represent a good selling opportunity for producers, as wartime price effects are historically short-lived, rising prices are attracting strong producer hedging with lower fixation levels than usual, and global trade flows remain fundamentally in surplus. 

Brazil Center-South: Crushing Revised Up and Record Production  

Center-South fundamentals have strengthened further. Improved vegetation indexes and crushing performance raised cane availability estimates to 610 Mt in 2025/26, up from the previous 605 Mt. Even with a lower mix — now at 50.6% — and ATR of 137.8 kg/t, sugar production is projected at 40.5 Mt, keeping exports high at approximately 31.65 Mt. 

For analysts, Brazil continues to anchor global supply. Strong Center-South production ensures substantial export volumes, reinforcing the global market’s surplus condition. For 2026/27, preliminary estimates suggest crushing near 630 Mt, supported by improved TCH after recent rains. However, the sugar mix — estimated at 48.6% — is not enough to eliminate the global surplus due to commercial constraints, pre-sales, and domestic fuel demand dynamics preventing mills from reaching the equilibrium mix of 46.2%. 

Ethanol in Brazil: Competitiveness Improves but Outlook Remains Uncertain  

Ethanol once again offers better returns than sugar, even in São Paulo. However, futures curves point to price uncertainty throughout the season. With Otto cycle growth projected at 2.5% and corn ethanol production estimated at 11 billion liters, stocks are expected to rise if the sugar mix remains near 48.6%. To avoid surpluses — whether in biofuel or sweetener markets — hydrous ethanol ex-mill prices in São Paulo would need to adjust to approximately R$ 2.3/liter, equivalent to sugar at 13.5 c/lb. 

Brazil North–Northeast: Corn Ethanol Expansion and Slight Sugar Improvement  

Sugar production in the North–Northeast region for 2025/26 was revised down to 3.6 Mt due to lower cane availability. For 2026/27, production is expected to recover slightly to 3.8 Mt, supported by favorable rainfall. The region is undergoing rapid expansion in corn ethanol output, expected to reach 1.5–1.7 billion liters next season. 

India: Strong Recovery Reinforces Global Surplus  

After gross production of around 30 Mt in 2024/25 and net output of 26.1 Mt, India began 2025/26 with increasing crushing and improved productivity. Net production is projected at 31.1 Mt, with 3.7 Mt diverted to ethanol. 

Exports remain limited due to lack of competitiveness: export parity sits near 18.5 c/lb for raw sugar and around USD 450/t for white sugar — levels unattractive for new shipments. 

Carlos Murilo Barros de Mello, Head of Sugar, points to a possible reduction at the end of the Indian harvest, which could remove 1 million tonnes from production and 500,000 tonnes from exports.

Any increase in the minimum sale price (MSP) would further strengthen domestic prices and restrict export flows under current global conditions.

Thailand: Recovery Limited by Crop Disease  

Although rainfall initially supported recovery expectations, diseases such as white leaf disease reduced crop potential. Crushing was revised to 97 Mt in 2025/26, with sugar output expected at 10.6 Mt — higher than last year but still below historical norms. 

EU27 + UK: Lower Production and Higher Import Dependence  

Combined sugar production is expected to fall to 15.8 Mt in 2025/26, from 16.5 Mt in the previous cycle. Imports should rise to 1.5 Mt, while exports may decline to around 1.0 Mt. 

With the EU–Mercosur agreement establishing a zero-tariff quota of 180 kt for Brazil and 10 kt for Paraguay, competition is expected to intensify, adding pressure on the European sugar sector. 

Mexico, U.S., Ukraine, Russia, and China Reinforce the Global Surplus Outlook for 2025/26:  

• Mexico: production forecast at 5.3 Mt with improving productivity and stronger exports. 
• U.S.: total sugar production estimated at 4.63 Mt (beet) and 3.88 Mt (cane); high stocks reduce imports to around 2 Mt. 
• Ukraine: production above 1.7 Mt, with at least 700 kt exportable surplus despite EU restrictions. 
• Russia: production estimated at 6.4 Mt in 2025/26, potentially reaching 6.7 Mt in 2026/27 if southern weather normalizes. 
• China: stable production at 11.17 Mt and steady imports supported by favorable prices and regulatory adjustments that reduced syrup imports. So far, 2025/26 imports are 21% higher year-over-year.

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