Shutterstock

Analysis Sugar

Sugar prices keep dropping as global supply rises

Today 11:00 am - Santiago Morales Hilarión

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.

suiker

Analysis Commodities

Global Sugar Surplus Revised Downward

suikerriet

Analysis Commodities

Sugar quotations start 2025 lower than previous year

suikerriet

Analysis Sugar

Sugar prices decline while Brazil produces less sugar

suiker

Analysis Sugar

Sugar prices tend upwards, trend is downward