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In 2024, Argentina’s sugar sector significantly increased exports, shipping nearly 600,000 metric tons (mt), a fivefold rise from the previous year. This surge was driven by global supply shortages, with adverse weather affecting major producers like Brazil, India, and Thailand, resulting in a projected global sugar deficit of 2.51 million metric tons (mmt) for the 2024/25 season. The sector sold USD 368.7 million in exports, with the United States (US), Chile, and Canada being top destinations. Sugar prices have remained attractive for exporters, with white sugar reaching USD 515/mt. Argentina anticipates continued strong export performance, bolstered by favorable weather conditions, and expects ethanol production to remain stable or increase. Industry representatives also emphasize the need for regulatory changes to promote competitiveness in the biofuel sector.
Brazil's sugar and molasses exports in the first ten days of Feb-25 saw a 47.1% decline in daily average exports compared to Feb-24, with shipments averaging 83,709.3 mt. This is significantly lower than the 158,125.2 mt per day recorded in Feb-24. Additionally, the price of sugar dropped by 10.6%, from USD 526.60/mt to USD 471.00/mt, leading to a 52.7% reduction in revenue. In the first ten days of Feb-25, Brazil earned USD 394.24 million, compared to USD 1.58 billion during the same period last year.
India's sugar production declined by 12% to 19.7 mmt by February 15, 2025, compared to 22.41 mmt during the same period in the previous marketing year, according to the Indian Sugar Mills Association (ISMA). The decrease is primarily due to lower output in Maharashtra and Karnataka. In Maharashtra, production fell to 6.82 mmt from 7.94 mmt, while Karnataka's output dropped to 3.58 mmt from 4.32 mmt. Additionally, sugar diversion to ethanol has increased to 1.41 mmt from 830,000 mt in the prior year. The marketing year runs from October to September.
India's sugar prices have risen by 6.5% over the past month. The increase is expected to continue due to a supply shortage caused by adverse weather and the resumption of sugar exports after a two-year hiatus. As of February 17, 2025, ex-mill prices for S-30 grade sugar in Maharashtra reached USD 43.41 per quintal (INR 3,790/quintal), up from USD 40.83/quintal (INR 3,565/quintal) in Jan-25. Production is down 12% year-on-year (YoY), due to a sugarcane shortage and early mill closures. By February 15, 77 mills had already shut down, compared to 28 by the same time last year, with most closures occurring in Maharashtra and Karnataka. Industry estimates suggest a significant drop in production for the 2024-25 season.
Thailand is poised for a surge in sugar production as falling cassava prices drive farmers back to sugar cane. The country, the world’s second-largest sugar exporter, could see output reach a seven-year high in the 2025/26 season, with production potentially hitting 13.2 mmt, up from 11.5 mmt in 2024/25, if weather conditions remain favorable. This expansion could increase the global sugar supply, exerting downward pressure on prices and intensifying competition among key exporters like Brazil and India.
Brazil's sugar prices remained stable at USD 0.50 per kilogram (kg) in W8, reflecting a 15.25% YoY decline, despite rising international prices. Weak domestic demand has pressured white crystal sugar prices in the São Paulo spot market, even during the off-season. This domestic devaluation contrasts with global trends, as Intercontinental Exchange's (ICE) Futures’ Mar-25 demerara sugar contract remains around USD 0.20 per pound (lbs), supported by supply concerns. If weak domestic demand persists, Brazilian mills may increase exports, potentially stabilizing domestic prices but exerting downward pressure on global markets. Conversely, if external demand strengthens further, domestic prices could find support.
In W8, US sugar prices dropped to USD 0.42/kg, marking an 8.70% decrease in both WoW and YoY from USD 0.46/kg. Despite this decline, the overall outlook for US sugar prices remains stable due to a balance of market factors. Sugar consumption is projected to decrease by 2.7% in the 2024/25 season, driven by shifting consumer habits. However, US sugar production is expected to reach a record 9.37 mmt, ensuring an ample domestic supply. This increase in production will likely reduce the need for imports, which are forecasted to fall to 2.89 mmt, down from 3.81 mmt in the previous season. Consequently, the sugar stocks-to-use ratio is projected to rise by 15.3%, exceeding the United States Department of Agriculture's (USDA) 13.5% benchmark. As a result, while short-term price increases have occurred, the combination of reduced demand and higher production suggests that significant price fluctuations will be avoided, leading to a stable market in the near future.
In W8, Mexico's sugar prices increased to USD 1.11/kg, reflecting a modest 2.78% WoW increase and a 35.84% YoY drop from USD 1.73/kg. In mid-Apr-25, approximately 17,000 mt of sugar are expected to be produced, benefiting 400 sugarcane producers in the Eldorado municipality. This marks the start of the 2025 harvest season, focusing on maintaining production continuity to prevent any risk of the mill’s closure, which would affect local economic stability and employment. As sugar production increases, much of the output is expected to be sold to traditional buyers such as soft drink companies and regional supermarkets, bolstering demand within domestic markets. However, ongoing challenges include ensuring adequate planting cycles for sugarcane and managing production efficiency.
Pakistan's sugar prices remained stable at USD 0.45/kg in W8, with a 10% YoY decrease. The stability is due to discounted prices during Ramadan and a surplus from last year's sugar production. However, rising sugarcane prices and inflationary pressures on production costs are increasing financial strain on mills. The government's actions to curb market manipulation could help stabilize prices, but ongoing high costs and crop shortages abroad may lead to upward price pressure in the future.
Brazil’s reduced sugar exports, due to weak domestic demand and a drop in sugar prices, highlight the need for diversification in export markets. Exporters should explore alternative markets in Asia, Africa, and the Middle East to mitigate the impact of Brazil’s declining shipments. Strengthening trade agreements with countries like China and expanding to emerging markets in Africa can help stabilize export volumes. Additionally, flexible contract terms should be negotiated to protect against price volatility, ensuring continued demand even if local markets remain sluggish.
Argentina’s strong export performance and favorable weather conditions position the country as a key player in the global sugar market amidst a projected supply deficit. Importers should negotiate long-term contracts with Argentine suppliers to ensure stable access to competitively priced sugar, particularly as global production shortfalls from major producers like Brazil and India could drive prices higher. By securing steady supply agreements, stakeholders can mitigate risks related to future price volatility and availability.
With Thailand poised for a significant increase in sugar production in the 2025/26 season, importers should anticipate potential price fluctuations and intensifying competition. Stakeholders should monitor the impact of Thailand’s expanded output on global sugar prices, particularly as it could create downward pressure in the market. Exporters in other regions may need to adjust their strategies, possibly focusing on value-added products or enhancing marketing efforts to maintain competitiveness. This dynamic also presents an opportunity for cost-conscious buyers to source sugar from Thailand as production increases.
Sources: Tridge, Noticias Agricolas, UkrAgroConsult, Economic Times, Economies, India Today, La Nación, Debate, Profit
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