Sugar volatility looms as Indonesia import cuts test Thai exports
Trade policy chief says farmers and business operators should adjust production plans and push into new markets as Indonesia pursues self-reliance.
- Indonesia, a key market representing over 27% of Thailand's sugar exports, plans to significantly reduce imports from 2026 to achieve self-reliance.
- The risk of price volatility is amplified by an expected increase in sugar production in Thailand, as well as in other major producers like Brazil and India, creating potential for a global oversupply.
- To mitigate the impact, Thailand is advised to diversify its export destinations by seeking new markets in East and Central Asia.
- Thai officials recommend upgrading the sugarcane industry to produce high-value, bio-based products like biofuels and bioplastics, reducing reliance on raw sugar exports.
Nantapong Chiralerspong, director-general of the Trade Policy and Strategy Office (TPSO) under the Ministry of Commerce, said an assessment of the sugar trade showed rising signs of challenge from higher sugarcane and sugar output both in Thailand and among major global producers.
This was coupled with the “self-reliance” policy of a key trading partner, Indonesia.
Farmers and business operators should prepare production plans in line with market demand, while accelerating the expansion and promotion of exports to new markets with potential and upgrading the cane industry towards high-value processing.
In particular, this includes developing towards bioenergy production and other bio-based products.
One signal to monitor is Indonesia’s policy aimed at reducing reliance on imported sugar for consumption, with a target to increase the use of domestic output to match domestic demand from January 1, 2026.
Indonesia is one of Thailand’s important sugar export markets, so Thailand may need to consider diversifying and finding additional replacement export markets in the next phase, especially as Thailand’s “2025/26 sugarcane output” is likely to increase because of favourable rainfall.
This year’s cane crush volume is expected to reach as much as 98 million tonnes, up 7 per cent from the previous year.
In 2025, Thailand was the world’s second-largest sugar exporter (customs tariff code 1701), after Brazil, with 5.5 million tonnes worth more than US$2.6 billion, up 13.3 per cent.
Exports to Indonesia were valued at US$715 million, representing more than 27 per cent of the total value of Thailand’s sugar exports, up 42.5 per cent.
This was followed by Cambodia at US$397 million, down 14.1 per cent; South Korea at US$263 million, up 10.9 per cent; and the Philippines at US$216 million, up 76.8 per cent.
If Indonesia does not import sugar, this would put pressure on domestic cane prices, affecting farmers’ incomes and Thailand’s exports.
Nantapong pointed to risks that could arise in the second half of 2026, when a sugar oversupply could occur as Thailand’s cane volume rises while demand from the main import market, Indonesia, declines.
At the same time, India and Brazil, both major global producers, also have higher output, which would put pressure on sugar prices in the global market.
However, despite price risks, the impact is unlikely to be severe enough to become a crisis, as Indonesia’s output is expected to be insufficient to meet domestic demand, based on import volumes last year.
Even if Indonesia bans sugar imports, there remains scope to apply for import permission under Regulation of the Minister of Trade No. 31/2025.
In addition, other Asian regional markets still need to import sugar for use in the expanding food and beverage industry.
Over the past five years (2021-2025), global sugar imports increased by an average of 0.3 per cent a year.
According to data from Grand View Research, the value of the global sugar market is expected to continue growing at an average rate of 6.5 per cent a year until 2030, reaching more than US$102 billion.
In 2025, the world’s five leading sugar importers were:
- China: 5.5 per cent
- United States: 4.9 per cent
- Indonesia: 4.8 per cent
- Bangladesh: 4.8 per cent
- India: 3.1 per cent
Therefore, Thailand may focus on expanding its customer base to East Asian and Central Asian markets that still have purchasing power, to reduce risks from relying on only a few main markets. Quality control, standards and origin are also important for building confidence among importers.
Nantapong added that amid obstacles and challenges in 2026, if operators adjust appropriately and promptly, opportunities for market expansion remain open and possible.
Beyond seeking new markets, Thailand should further develop cane into more than “sugar” by accelerating development and upgrading towards the bioeconomy (Bio-Economy), creating new market opportunities through “value-added” products.
Examples include using sugar to produce biofuel, especially to meet continuing growth in demand from the transport sector, and using bagasse as fuel for electricity generation.
In addition to helping reduce factory costs, this is also in line with clean-energy trends and the creation of alternative products.
These include promoting the production of bioplastics and packaging from sugarcane bagasse, which commands prices many times higher than sugar.
If major producing countries shift more towards fuel (ethanol) production, sugar prices are also expected to move in a better direction.
Nantapong said global production and trade conditions can continue to change and fluctuate at any time, especially for crops dependent on climate and seasons.
Close monitoring of prices and trading partners’ policies will therefore help farmers and business operators plan short-, medium- and long-term adjustments and create market opportunities amid volatility in policies and other factors in the global market.
