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According to Dutch multinational banking and financial services company Rabobank, the European Union (EU)-Mercosur agreement will unlikely boost Brazilian sugar exports to the EU. The agreement includes a duty-free quota for 180,000 metric tons (mt) of Brazilian sugar, replacing part of the current 350,000 mt annual export quota, with a tariff of USD 101.11/mt (EUR 98/mt) tariff. While this adjustment enhances the competitiveness of the new quota, Rabobank's Dec-24 report states it will not result in increased imports.
India's sugarcane yields are declining due to drought and excessive rainfall in 2024, potentially lowering sugar output below domestic consumption for the first time in eight years. Production for the 2024/25 season is forecasted to fall to 27 million metric tons (mmt), down from 32 mmt in 2023/24, against annual consumption exceeding 29 mmt. This has eliminated the possibility of sugar exports in the season, ending on Sep-25, supporting global sugar prices.
Major sugar-producing states—Maharashtra, Karnataka, and Uttar Pradesh—are experiencing reduced yields due to adverse weather and disease. Contributing nearly half of India's sugar output, Maharashtra and Karnataka faced drought in 2023, reducing yields by 10 to 15 mt per hectare (ha). In Uttar Pradesh, red rot disease has impacted plantations, prompting farmers to adopt new cane varieties. The government may allow only limited exports, prioritizing ethanol production.
On December 26, 2024, Kyrgyzstan's Ministry of Water Resources, Agriculture, and Processing Industry proposed temporarily banning white sugar imports for six months to support local producers and enhance sugar beet output and quality. In 2024, the country's sugar beet harvest totaled 870,200 mt, marking an increase of 249,200 mt compared to the previous year.
Between Jan-24 and Oct-24, Peru's sugarcane production amounted to 8.319 mmt, an increase of 1.33% compared to the 8.217 mmt reported in the previous year. The Peruvian Association of Sugar and Derivatives Agroindustrialists (Perú Caña) reported this, using information from the Ministry of Agrarian Development and Irrigation (MIDAGRI). National sugarcane production reached 10.089 mmt in 2023, an increase of 5.27% compared to the 9.584 mmt obtained in 2022.
In Oct-24, sugarcane production reached 1.05 mmt, a 1% YoY increase. Additionally, national sugar production from Jan-24 to Oct-24 reached 900,121 mt, a 6% YoY increase compared to 853,160 mt in the previous year.. In 2023, sugar production reached 1.06 mmt, decreasing by 4.56% compared to 1.11 mmt in 2022. Peru's output reached 120,276 mt in Oct-24, a 6% YoY increase from Oct-23.
According to the National Association of Sugar Producers of Ukraine (Ukrsugar), Ukraine's sugar industry achieved a record high in 2024, exporting 746.3 thousand mt of sugar worth USD 419 million. This marked the highest annual sugar export level since records began in 1997.
Of these exports, 40% were directed to the EU, while 60% went to the global market, primarily to the Middle East and North Africa region (MENA) and North Macedonia.
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Brazil's sugar prices remained stable at USD 0.52 per kilogram (kg), showing no weekly changes but reflecting a 13.33%YoY decline. Despite this decrease, Brazil is expected to maintain its leading position in the global sugar market in 2025, with prices projected to strengthen domestically and internationally. Favorable domestic prices are anticipated, driven by potential arbitrage opportunities between local and global markets, and steady, albeit slow, economic growth likely to support domestic demand and absorb local supply. Additionally, a significant portion of Brazil's sugar exports has already been secured at high price levels, stabilizing revenue even amidst YoY price declines. A favorable exchange rate may enhance Brazil's export competitiveness, while global trade tensions, particularly between the United States (US) and China, could open new market opportunities for Brazilian sugar and ethanol. Although current prices are lower than last year, the outlook for 2025 remains optimistic, with strong export demand, tight global stocks, and supportive macroeconomic conditions likely to stabilize or increase sugar prices.
US sugar prices remained stable at USD 0.43/kg in W1, reflecting a 10.42% YoY decrease. This price decline coincides with a downward adjustment in the United States Department of Agriculture's (USDA) 2024/25 sugar production forecast, reduced by 45,359.25 mt due to lower sugar extraction from beet molasses. With domestic production expected to fall below 2023 levels, the USDA has increased its import projection by 272,155.5 mt, heavily relying on Mexican sugar imports to meet demand.
While the stocks-to-use ratio remains at a manageable 13.5%, the growing dependence on imports poses risks, particularly if global market conditions or trade policies shift. Any disruptions in supply chains or tariff changes could exert upward pressure on sugar prices in 2025, making the market sensitive to external factors.
Mexico's sugar prices remained steady at USD 1.13/kg in W1 but experienced a significant 40.84% YoY decline. Despite this drop, the president of the Local Union of Sugar Cane Producers (ULPCA) reported a promising harvest season in Morelos, particularly in the eastern region, with expectations for large national sugar production. However, there is concern among producers about the potential importation of sugar, which could lower domestic prices. The ULPCA president emphasized that such imports, particularly from countries producing lower-quality sugar, would reduce payment to local producers and harm the sugar industry.
While a strong harvest is expected, the risk of overproduction remains, which could lead to market oversaturation and further depress prices. The call for the government to avoid sugar imports highlights the delicate balance between maintaining price stability and safeguarding local producers' earnings. Future price trends will depend on the government's stance on imports and the actual production levels, with the potential for market fluctuations if excess supply and external competition affect domestic prices.
Pakistan's sugar prices remained stable at USD 0.45/kg but saw a 12.50% month-on-month (MoM) increase from USD 0.40/kg. The recent price shift follows ongoing discussions and policy initiatives to improve the sugar industry's efficiency and ensure price stability. The Minister for Planning, Development, and Special Initiatives highlighted the need for a medium-term framework to deregulate the sugar sector and improve data accuracy across industry stakeholders, including sugar mills and government institutions. Efforts to address persistent issues such as the lack of uniform data reporting and the inefficiency of sugar mills, particularly regarding recovery rates, are central to this framework. However, problems such as potential sugar smuggling, trade restrictions, and changes in export regulations could introduce price volatility, requiring careful monitoring of domestic and global market conditions.
To compensate for limited growth in Brazilian sugar exports to the EU, stakeholders should focus on expanding trade relationships with emerging markets in regions like the MENA and Southeast Asia, where demand for sugar remains strong. By targeting new or underserved markets, exporters can diversify their customer base, reduce dependency on saturated markets, and potentially capitalize on favorable exchange rates to enhance competitiveness. Establishing trade agreements or partnerships with countries in these regions can help mitigate the impact of stagnant EU demand while exploring untapped opportunities.
Given the forecasted decline in India's sugar output due to adverse weather and disease, businesses should explore strategies to support and strengthen domestic production. This could involve investing in research for drought-resistant sugarcane varieties, improving irrigation systems, and increasing the adoption of sustainable farming practices. Collaborations between private companies, farmers, and government bodies could enhance productivity and reduce risks related to climatic and disease-related disruptions. Furthermore, incentivizing ethanol production as an alternative outlet for excess sugarcane could help stabilize the market and reduce reliance on sugar exports.
With Kyrgyzstan, Mexico, and Pakistan considering regulatory changes to manage sugar imports and protect local markets, businesses in these regions should stay vigilant about potential shifts in import policies. To mitigate risks, stakeholders should actively engage with local authorities, monitor changes in trade regulations, and explore ways to optimize production efficiency and sustainability. Building strategic partnerships with local governments and producers can help secure stable sugar prices while preventing market volatility caused by import surges or potential protectionist measures.
Sources: Tridge, Agraria, Foodmate, Ukragroconsult, Agro Gov, Noticias Agricolas, EOM
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