Südzucker reports the first ever operational loss of the sugar division in the last quarter, as a result of the low sugar prices. With the price drop of sugar, European sugar producers expect a lower price for sugar beets this year as well. This is expected to lead to a smaller sugar beet area.
Following the downward trend that started in 2024 and continued into the first week of 2025, sugar prices continue to fall in the second week of the new year. Sugar prices on the Intercontinental Exchange (ICE) in New York and London closed lower on Monday, January 13, compared to a week earlier, despite a slight rebound during the week. In London, prices closed at $496,40 per tonne, down 2,11% from the previous week. In New York, prices closed at $416,67 per tonne, down 2,22% from the previous week.
Compared to a year ago, the price drop is even more pronounced. Sugar prices closed 19,7% lower in London and 12,54% lower in New York than last year.
More availability puts pressure on prices
Increased supply from producing countries is further depressing sugar prices. Rainfall has improved the sugarcane harvest in southern and central Brazil. Increased sugar supplies are also expected from Thailand, thanks to higher production and export restrictions of liquid sugar (syrup) to China. In the US, production records are expected as a result of higher yields from sugar beet processing.
Global sugar production has increased, leading to a lower sugar shortage. According to the International Sugar Organization (ISO), the deficit for the 2024/25 harvest has been revised from 3,58 million tonnes in August to 2,51 million tonnes in November.
Brazil
Rainfall increased in Brazil significantly increased in November compared to last year and historical averages. According to data from sugar organization Unica, this resulted in higher sugar cane yields (62 tons per hectare) and a larger supply of sugar cane. This increase in rainfall contrasts with the past eleven months, during which the number of millimeters was well below average and the country had to deal with extreme weather conditions, including drought and heat waves. The challenging weather conditions had a major impact on the sugar cane yields of the 2023/24 harvest and the (rising) sugar prices.
India
Favorable weather conditions resulting from the southwest monsoon in India in 2024 should lead to a larger sugarcane crop for the 2024/25 season. The US Department of Agriculture (USDA) estimates the yield at 35,5 million tons. While favorable weather conditions and higher processing rates point to higher production, sugar exports are expected to decline due to export restrictions imposed by the Indian government.
Thailand
Thailand’s sugar production is expected to increase by 18% in the 2024/25 season. However, export challenges to China could impact global sugar availability. China’s suspension of syrup and sugar blend exports since January 3rd poses a significant challenge to the world’s second-largest sugar exporter and could lead to increased sugar availability on the international market.
Drop in revenues for EU producers
The downward trend in sugar prices is also affecting the European sugar sector. In Germany, Südzucker saw its revenues for the 2024/25 financial year decline. Between March and November, sales fell slightly by 4,02% compared to the previous year to €7,466 billion.
Despite a significant increase in sales volumes, the fall in sugar prices had a stronger impact on turnover in the sugar division. Turnover decreased by 0,06% to €3,104 billion. For the third quarter of 2024/25, the sector reported an operating loss of €23 million for the first time, due to the sharp price decreases and the high costs of 2023 inventories, which were still being sold in November.
The large variation in yields throughout the year and between different producing regions poses a challenge for the 2024 beet campaign. This is largely attributed to the weather conditions in the production areas. These weather conditions ranged from heavy rains and cool temperatures to droughts and intense heat.
Additional challenges include Cercospora pests and beet yellowing disease, which are inhibiting sugar beet growth, and a decline in beet yield and quality due to the bacterial infection Syndrome Basses Richesses (SBR) advancing in Germany. Some of these challenges may be related to the restrictions on crop protection products (ban on neonicotinoid seed coating) imposed by the EU in 2023.
Smaller sugar beet area in 2025
With the current drop in sugar prices, EU sugar producers also expect a lower price for sugar beet in 2025. This price drop is expected to lead to a reduction in sugar beet area, as farmers may switch to more profitable crops. In line with these developments, major sugar producers in Germany (Nordzucker and Südzucker), Sweden (Betodlarna) and the United Kingdom (ABF) have expressed expectations that sugar beet area will decrease in 2025.