Following the downward trend observed in 2024 and the first week of 2025, sugar prices continued to decline into the second week of the new year. Südzucker reported its first-ever operating loss in the sugar segment driven by low sugar prices.
Sugar prices on the Intercontinental Exchange (ICE) in New York and London closed lower compared to the previous week, despite a slight rebound during the week. In London, prices closed at $496.40 per ton, down 2.11% from the previous week Following the downward trend observed in 2024 and the first week of 2025, sugar prices continued to decline into the second week of the new year. Südzucker reported its first-ever operating loss in the sugar segment driven by low sugar prices. ew York, prices settled at $416.67 per ton, marking a 2.22% decrease from the previous week.
When compared with the price a year ago, the reduction has been more pronounced. Sugar prices closed 19.7% lower in London and 12.54% lower in New York compared to the previous year.
Increased sugar availability as a driver of price
reduction
The favorable supply in producing countries is driving down prices. Increased rainfall has benefited the
sugarcane harvest in South-Central Brazil. Sugar availability from Thailand is
expected to increase due to higher production and restrictions on liquid sugar (syrup)
shipments to China. Production records are expected in the US, explained
by increased yields in sugar beet processing.
The global supply of sugar has increased, reflected in a reduced sugar deficit forecast by the ISO (International Sugar Organization) for the 2024/25 harvest, from 3.58 million tons in August to 2.51 million tons in November.
Brazil
November rains increased significantly from last year
and the historical average in Brazil, portraying an increase in sugarcane yields (62 tons
per hectare) and overall sugarcane supply, according to Unica data. The
increase in rainfall in November contrasts with the last eleven months, with rain
levels well below the historical average, and extreme weather events (droughts
and heatwaves). Challenging weather conditions significantly
impacted sugarcane yields during the 2023/24 harvest and contributed to
previous sugar price increases.
India
Favorable weather conditions
from the southwest monsoon in 2024 indicate an increase in the sugarcane
harvest for the 2024/25 season to 35.5 million tons, according to the USDA. While
favorable weather conditions and improvements in the recovery rates of
processing forecast an increase in supply, sugar exports will likely decrease
due to export restrictions set by the Indian government.
Thailand
Expectations for higher sugar
production forecast an 18% increase for 2024/2025. However, challenges in
exports to China may impact the global sugar supply. The
suspension of syrup and sugar blends imposed by China, effective since January 3,
plays an important challenge for the second sugar exporter and could increase
the availability of sugar in the international market.
Reduction in revenues for EU producers
The downward trend in prices is affecting the EU sugar
sector. In
Germany, the revenues of Group Südzucker AG faced a reduction in their revenues
for the accumulated fiscal year 2024/25. Between March and November the revenue
decreased slightly by 4.02% from the previous year to €7,466 million.
Despite a significant increase in sales volumes, the sugar price reduction had a stronger impact on sugar segment revenues, which decreased by 0.06% from the previous period to €3,104. For the third quarter of 2024/25, the sector operated at a loss (-€23 million) for the first time due to the sharp reduction in prices and the elevated costs of inventories from 2023, which were still being sold in November.
For the 2024 campaign, the high variation in yields throughout the year and between producing regions presents a challenge, related to the weather conditions in the producing regions. Weather conditions have ranged from heavy rainfall and cool temperatures to droughts and intense heat.
Additional challenges include cercospora infestations and yellowing disease, which hinder the growth of sugar beets, as well as a decline in beet yield and quality caused by the advancing bacterial infection Syndrome Basses Richesses (SBR) in Germany. Some of these challenges may be linked to the restrictions on crop protection products (the ban on seed coating with neonicotinoids) imposed by the EU in 2023.
Reduction in sugar beet areas for 2025
With
the current trend in sugar prices, sugar producers in the EU forecast a
reduction in the prices of sugar beet for 2025. A price reduction in sugar beet
will be likely reflected in a reduction of the cultivation areas, as farmers
might choose to change to more profitable crops. In line with these developments, relevant sugar producers in
Germany (Nordzucker, Südzucker), Sweden (Betodlarna), and the UK (ABF) have
spoken about their expectations for a decrease in sugar beet areas for 2025.