Bangkok: Thailand's Trade Policy and Strategy Office (TPSO) has called on the country's sugar producers to pivot towards value-added processing and a bio-economy model, warning of a potential domestic sugar surplus in the second half of this year as global supply expands and a key export market narrows, VietnamPlus reported.

Nantapong Chiralerspong, Director-General of TPSO, was quoted by local media as saying that rising sugarcane and sugar output both within Thailand and across global markets, combined with Indonesia’s move towards sugar self-sufficiency, made it essential for the industry to adapt proactively. He said sugar stakeholders would need to align production with market demand, identify new export destinations, and accelerate the shift towards bio-energy and bio-products.

Nantapong said that if major manufacturers scaled up ethanol production, it could help support sugar prices.

On the supply side, Thailand’s 2025-26 sugarcane output is expected to increase on the back of favourable rainfall conditions, with total cane crushing projected at 98 million tonnes - up 7 per cent year-on-year, according to the report.

Thailand ranked as the world’s second-largest sugar exporter in 2025, behind Brazil, shipping 5.5 million tonnes valued at over 2.6 billion USD. Indonesia was the largest destination, with exports to that market valued at 715 million USD and accounting for more than 27 per cent of Thailand’s total sugar export earnings. Other significant markets included Cambodia, the Republic of Korea, and the Philippines.

With Indonesia now actively pursuing a self-sufficiency policy, TPSO said Thai producers must broaden their base of export partners to offset the expected decline in Indonesian demand. The office identified the potential for a domestic sugar glut and reduced offtake from Indonesia as the primary risks facing the sector in the latter half of this year. Higher output from major global suppliers such as India and Brazil is also expected to weigh on international sugar prices.