Global sugar prices rose significantly during the last week driven by production limitations in Brazil and trade challenges in Asia, despite India’s approval of exports and the Chinese ban on Thai sugar syrup imports. In the Netherlands, Cosun’s sugar beet campaign closed with challenges in plant yields and sugar content.
Sugar quotations have been on the rise since January 21, the lowest point since August. London closed at $507 per ton, increasing by 6.89% from last week. New York raw sugar prices closed 5.22% higher to $422.63 per ton.
Prices have increased despite China suspending sugar syrup imports from Thailand and India's resuming sugar exports. The price increase is driven by higher domestic prices in India and reduced sugar output in Brazil.
Prices in India increase after
approval of exports
After the Indian government announced the
export of one million tons, Indian traders have faced challenges in securing
contracts. Indian
sugar mills set prices well above London benchmarks, while potential buyers are
refusing to pay these prices. Reuters stated that last week, traders closed contracts
on white sugar at FOB prices from $10 to $15 per ton higher than London
futures.
Local prices increased nearly 10% after the Indian government authorized exports, reducing pressure on sugar mills to export. Since the approval of exports is allowed until September, it appears that Indian millers feel comfortable waiting for prices to increase. Additionally, the Indian sugar industry is seeking government approval to increase the minimum support price for sugar.
Although exports have been allowed, the Indian Sugar Mills Association (ISMA) is expecting a 13.8% year-over-year decrease in 2024/25 sugar production to 27.6 million tons, the lowest production in five years. However, the Indian government plans to increase its agriculture budget to boost agricultural production, which will also impact the sugar sector. According to Reuters, the Indian government plans to allocate $20 billion to agriculture in the 2025/26 budget to support rural incomes and tackle inflation. The funds would promote the development of seed varieties, improve infrastructure for the storage and delivery of agrifood products, and enhance the overall production of the agrifood sector. With this measure, subsidized loan limits to farmers are expected to increase 66.7% to 500,000 Rupees (converted approximately $5,775).
Although Chinese authorities stated that imports were suspended due to factory hygiene concerns, the TSEA believes the Chinese government is protecting their local sugar production. Both the TSEA and the Thai Sugar Millers Corporation have sent a letter to the Thai authorities to hasten negotiations with the Chinese government, which insists on the inspection of several factories before opening negotiations.
If an agreement is not reached soon, Thailand’s sugar demand will likely be reduced by one million tons. With storage facilities full of sugar, both local demand and prices of sugar will suffer. Furthermore, sugar production is expected to increase by 18% in 2024/25 to 10.4 million tons, placing further pressure on the prices. Sugar production in Brazil remains affected by the dry weather conditions and previous fires. According to the updated data of the Brazilian sugar association Unica, Total sugarcane production for the 2024/25 market year declined by 4.9% from the previous period to 1,228 million tons. In turn, sugar production decreased by 5.5% from the previous period, totaling 79.6 million tons.
Lower sugar content in beets EU
In the EU, Cosun Beet Company has finished processing the last sugar
beets in their Dutch factories, while the campaign in Anklam (Germany) will
close in early February. The
growing season faced unfavorable weather conditions, with heavy rains early on
and droughts at the end. Weather challenges and leaf mold outbreaks decreased
sugar beet yields and sugar contents. Sugar beet yields decreased by 11.6% from the
five-year average to 12.2 tons per hectare. However,
sugar yields reported by Cosun are 10.1% higher than the EU’s average sugat beet yield for
2024/25 (11.1 tons per hectare), according to data from the EU Commission.
