Imports from Ukraine are decreasing, sugar prices are falling

Sowing sugar beets is currently very difficult in western Europe. Just like in the Netherlands, Belgian and French beet growers have also seen a considerable amount of precipitation fall on their plots, which means that many have hardly sown. A lot of precipitation has fallen, especially in the center and north of France, and sowing is considerably delayed, French media report. The European Commission's JRC also indicates in the monthly MARS bulletin that the amount of precipitation last winter and weeks hinder sowing. In the Netherlands, more than 2% of the beet area had been sown by the end of March, according to Cosun. However, growers in various regions took their chance last week and the percentage mentioned is somewhat outdated after the Easter weekend. There is no longer an average sowing date for beets this year. The long-term average is around the end of March/beginning of April.

EU sugar price falls
Sugar prices on the European spot market and short-term contracts stabilized around the turn of the year, but fell again in February for the first time in a long time. This is evident from figures from the European Commission on the European sugar market. The average white sugar price drops by €16 to €837 per tonne in February. There are large differences per region, for example, the price in Northern and Eastern Europe (region 1) drops to an average of €790 per tonne and also in Western Europe (region 2) to an average of €840 per tonne. In Southern Europe (region 3) the price is increasing again to an average of €925 per tonne. Regions 1 and 2 have a (small) sugar surplus, while region 3 has a shortage and that explains these differences. A factor in Eastern Europe that influences the price (and partly the entire EU market) is the large amount of sugar entering Poland and Romania from Ukraine. This has put pressure on sugar prices in recent months and recent figures confirm this.

The fact that sugar production in Europe has increased again is also reflected in the import volumes this season. They are a lot lower. Approximately 20 tonnes of sugar were imported up to and including March 818.000, almost half of 2022/23 at the same time when the counter stood at almost 1,5 million tonnes of sugar. The import volume is now reasonably comparable to two and three seasons ago. These volumes have shrunk somewhat, especially since the turn of the year. EU sugar exports have also increased again in 2023/24 and stand at 534.000 tonnes. This means that exports hardly deviate from 2021/22 and appear to have recovered well.

Ukraine has been the EU's largest sugar exporter in recent months and this has not changed according to the latest figures from the European Commission up to and including March 20. 35% of the sugar comes from Ukraine, or 285.000 tons. This volume is 45% higher than last season 2022/23 in the same period. Ukraine is now also the cheapest supplier of white sugar to the EU with an average price of €717 per tonne. Ukraine is thus leaving behind Brazil - which has been by far the cheapest provider in recent years - as well as countries that fall under the EPA/EBA trade agreements.

Sugar imports from Ukraine are declining
Due to the loss of other export destinations since the Russian invasion and expansion of the beet area, Ukraine has to export a considerable volume of sugar. The EU is very interesting due to the sugar shortage, duty-free imports and accessible exports and is therefore the largest consumer of sugar. However, the European Commission's analysis shows that import volumes of sugar from Ukraine have declined considerably since the turn of the year. The peak was reached in November 2023 with 68.000 tons of sugar. Since then, the monthly volume has fallen significantly and 'only' 12.000 tonnes were imported by the EU in the first twenty days of March. The impact of amended legislation and regulations for the import of agricultural products and raw materials from Ukraine is nil in this decline, as the new policy and import limits will only come into effect later this year and next year. It is known that the Ukrainian government and industry are trying to regulate the export of various raw materials and that seems to be a factor in this to a certain extent. In this way, they try to secure access to the EU market for the long term, instead of continuing to increase exports to the extent that trade restrictions follow.

In the past 2022/23 season, approximately 98% of Ukraine's total sugar exports were exported to the EU and the United Kingdom due to the loss of export destinations due to the Russian invasion. While in the previous seasons, Ukrainian sugar exports to the EU varied from 2% to 12%. A huge difference, with Ukraine also indicating that it cannot count on one sales area. In recent months, the Ukrainian government has emphasized that it is looking for other sales areas and that seems to be working. This 2023/24 season, more than 10% of total exports were exported to other countries such as the EU. The Ukrainian agriculture minister indicated at the end of March that 20% of the shipments went to African countries.

Futures markets are trading plus again
In contrast to the average sugar prices in Europe, sugar contracts on the futures markets in London and New York have increased in small steps since the beginning of March, after reaching $4 per tonne in London on March 594. At the time of writing (Tuesday afternoon, April 2), the white sugar contract is trading at $645 per tonne. The raw sugar contract in New York shows a similar trend, but rose less rapidly. In the short term, eyes on the global market are mainly focused on India and Thailand. Brazil is also closely monitored. In India, sugar production turned out to be somewhat higher than previously estimated, but this is unlikely to lead to a lifting of export restrictions. These still apply since they were introduced last season to protect the domestic market against high sugar prices. This disrupts import and export flows in various Asian countries. Moreover, by 2024/25, India is expected to plant less sugarcane due to lower yields, increased costs and moderate prices.

In Brazil, sugar exports are still well above average thanks to record sugar production and good demand elsewhere in the world. Despite area expansion in sugar cane cultivation, several analysts and the Brazilian agricultural consultancy DATAGRO do not expect new record production. Drought during the growing season hinders sugarcane cultivation in key growing areas, which has a negative effect on yields.