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Global sugar prices rose 6.6% month-on-month (MoM) in Feb-25, reversing three months of decline, according to the Food and Agriculture Organization (FAO). The increase was driven by lower production prospects in India, one of the world's largest sugar producers and exporters, and adverse weather in Brazil, the world's top exporter. The overall FAO Food Price Index (FFPI) rose 1.6% MoM, with sugar contributing significantly to the surge. Market dynamics suggest continued price volatility amid supply uncertainties.
The International Sugar Organization (ISO) projects a global sugar deficit of 4.881 million metric tons (mmt) for the 2024/25 marketing year (MY), a sharp increase from the 2.513 mmt forecast in Nov-24 and the largest deficit in nine years. Global production has been revised down to 175.54 mmt, 5.84 mmt lower than the previous season, due to reduced output in major producing regions like India, Pakistan, and Thailand. Consumption is forecast to reach a record 180.42 mmt, though slightly lower than previous projections. Trade dynamics will play a significant role, with imports and exports both expected to fall, leading to a substantial drawdown in global sugar stocks.
The latest Brazilian Sugarcane Industry Association (UNICA) report aligned with market expectations, causing no significant price movement. Center-South Brazil crushed 245 thousand metric tons (mt) of sugarcane, producing 7 thousand mt of sugar and 381 million liters (L) of ethanol— typical of the off-season and lower volumes than in 2023/24. Increased ethanol production in 2024/25 reduces domestic supply risks, supporting a robust 2025/26 sugar harvest and a potential medium-term price decline. While India’s sugar production is 14% below last season, and Thailand’s forecast has been revised down to 10.5 million tons, global trade flows remain stable. Short-term sugar prices are supported by tight supply, but future trends will depend on Brazil’s upcoming harvest and demand conditions.
India is on track to exhaust its government-allowed sugar export quota of 1 mmt for the 2024/25 MY, according to the Chief Executive Officer (CEO) of the Indian Sugar and Bioenergy Manufacturers Association (ISMA). With 600,000 to 700,000 mt already exported, India expects to complete the quota by Sep-25. The government lifted export restrictions for the 2023/24 season to ensure adequate domestic supply, with priorities focused on meeting domestic consumption, ethanol blending, and exports. In addition, the CEO anticipates a strong harvest next season but is not seeking additional export quotas.
Myanmar's white sugar production has slightly declined despite normal operations at most sugar mills, with 26 of 29 large mills active as of W10. Transportation challenges have led some sugarcane to be processed into brown sugar instead, as its price is higher than white sugar. The 2024 sugarcane season is expected to yield approximately 500,000 mt of white sugar, with domestic consumption exceeding 300,000 mt. However, exports have declined due to lower international prices, while reduced domestic demand has also led to a slight drop in white sugar prices.
A preliminary forecast suggests that Russia's sugar production for the 2025/26 season could range between 6.2 and 6.8 mmt, slightly higher than the 6.3 mmt expected for the current season. As of February 27, 6.05 mmt of sugar, including from accumulated syrup, have been produced. The area under sugar beet cultivation may increase marginally to 1.173 million hectares (ha) in 2025, driven primarily by expansion in the Central Black Earth Region. However, a slight increase in the sugar beet area is expected, given the difficult grain situation. Despite the potential for increased sugar production, a significant overproduction is unlikely, with Russia capable of exporting up to 1 mmt of sugar if necessary. Challenges such as high interest rates, proximity to conflict zones, and unfavorable weather conditions may impact production. Sugar beet costs are projected to rise, with growing expenses for modern farms.
Ukraine exported over 403.5 thousand mt of sugar in the first six months of the 2024/25 MY, with 98.4% reaching global markets and 1.6% sent to the European Union (EU). Exports to the EU resumed in Feb-25, primarily to Bulgaria, Greece, and Italy. Key non-EU destinations included Türkiye, Libya, North Macedonia, Somalia, and Sri Lanka. Ukrainian sugar production for the 2024 season totaled 1.8 mmt, while domestic demand is estimated at 900 thousand mt annually.
Brazil's sugar prices reached USD 0.49 per kilogram (kg) in W10, reflecting a 2.08% week-on-week (WoW) increase and a 14.04% yearly rise. The recent report from UNICA showed a typical off-season decline in production, with lower sugar and ethanol output in Center-South Brazil. However, increased ethanol production for the 2024/25 season mitigates domestic supply risks, supporting expectations for a strong 2025/26 sugar harvest. While current sugar prices are supported by tight supply, future price trends will largely hinge on Brazil's upcoming harvest and global demand dynamics.
In W10, United States (US) sugar prices rose to USD 0.41/kg, reflecting a 2.50% increase WoW, though down 16.33% year-on-year (YoY). A significant issue impacting the market is the oversupply of sugar, driven by record domestic production and increased high-tier imports, which surged from 455,000 mt in 2022/23 to 1.231 mmt in 2023/24. Despite these import levels, domestic consumption has contracted, resulting in higher beginning stocks and a supply-demand imbalance that is pressuring prices lower.
Concerns are growing about the continued reliance on high-tier imports, which are not regulated by the United States Department of Agriculture (USDA). As high-tier imports continue to flood the market, there are potential risks to the US-Mexico sugar trade agreement, which could further destabilize the market. If trends persist and Mexico’s access to the US market remains limited, the oversupply situation may worsen, potentially lowering US sugar prices further. The balance between domestic production, high-tier imports, and demand will be key to future price movements.
Mexico's sugar prices reached USD 1.06/kg in W10, reflecting a 2.75% weekly decrease and a significant 39.77% YoY drop. The imposition of 25% tariffs by the US on key Mexican agri-food exports, including sugarcane, presents a severe risk to the Mexican sugar market. With regions like Jalisco and Veracruz heavily reliant on sugar production, the tariffs could disrupt exports, leading to an oversupply in the domestic market and potential price volatility. The combination of trade uncertainties, drought, and structural weaknesses in Mexico’s agricultural sector may exacerbate the situation, potentially resulting in long-term economic challenges and further price instability.
Pakistan's sugar prices increased to USD 0.47/kg in W10, reflecting a 4.44% increase WoW and MoM. The country is facing a looming sugar shortage of nearly 1 mmt, with retail prices ranging between USD 0.59 to 0.61/kg (PKR 165 to 170/kg), up from USD 0.50 to 0.54/kg (140 to 150/kg) the previous month. The shortage is primarily driven by the export of 700,000 mt of sugar in the past year, a decrease in sugarcane recovery rates, and a 20% drop in cultivated area. While Pakistan's sugar production for 2024/25 is expected to rise by 3% YoY, the surplus is minimal, with domestic consumption estimated at 6.6 mmt.
If supply disruptions occur, such as hoarding or delays, prices could spike further, potentially hitting USD 0.71/kg (PKR 200/kg). This issue is exacerbated by the timing of the Ramadan season when sugar demand peaks. Although the government has allocated 100,000 mt of subsidized sugar, critics argue that this measure is insufficient, as it only covers a small fraction of demand. Factors such as rising sugarcane prices and adverse weather conditions, including global warming and pest attacks, further threaten supply stability.
With a global sugar deficit projected for 2024/25 MY and tight supply conditions, stakeholders should consider securing long-term contracts with diverse suppliers to avoid reliance on single markets like India, Brazil, and Thailand. Producers should also explore increasing domestic sugar production by incentivizing local farmers through subsidies and providing access to climate-resilient farming techniques.
Given the uncertainties in the global sugar trade, especially concerning India's export quotas and Mexico's tariff challenges, industry players should remain flexible with their trade strategies. Diversifying export markets and establishing partnerships in regions with growing demand can help mitigate the impact of trade disruptions and tariff barriers.
In light of fluctuating sugar prices driven by adverse weather conditions and changing production forecasts, companies should invest in improved storage infrastructure and adopt hedging strategies to buffer against price volatility. In addition, monitoring weather patterns and harvest forecasts in key regions will enable better supply chain planning and risk management.
Sources: Tridge, Terre-net, UkrAgroConsult, Foodmate, Noticias Agricolas, Agro Investor, Food Business News, Noticias Agropecuarias, ChiniMandi
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