Global sugar prices rose significantly last week, despite the resumption of Indian sugar exports and the Chinese ban on Thai sugar syrup imports. Lower sugar production in Brazil and trade challenges in Asia weighed more heavily. In the Netherlands, Cosun ended the beet campaign with disappointing yields and a lower sugar content.
Cosun Beet Company has completed the processing of the last sugar beets in the Netherlands. The growing season was affected by unfavourable weather conditions, heavy rainfall at the beginning and drought at the end of the season. In combination with an outbreak of leaf mould, this led to a decrease in sugar beet yield and sugar content.
The yield is 11,6% lower than the five-year average at 12,2 tonnes per hectare. However, Cosun's hectare yield remains higher than the EU average for 2024/25 (with the currently available information) of 11,1 tonnes per hectare (according to data from the European Commission). The beet campaign in Germany will end in early February.
Global sugar prices rise
Sugar prices have risen sharply since January 21, the lowest point since August. London closed at $28 a tonne on January 511,50, up 9,7% in a week. In New York, raw sugar prices rose 8,1% to $423,95 per ton.
The price increase is notable as China has suspended imports of Thai sugar syrup and India has resumed exports. The increase is supported by higher domestic prices in India and a decline in sugar production in Brazil.
In Brazil, sugar production continues to be affected by drought and previous forest fires. According to the latest data from the Brazilian Sugar Association Unica, the total sugarcane yield from 2024/25 will decrease by 4,9% to 1.228 billion tons. This means that sugar production will decrease by 5,5% compared to the previous period to 79,6 million tons.
Higher prices in India after exports resume
Since the Indian government approved the export of 1 million tonnes of sugar, Indian traders have been struggling to secure contracts. Indian sugar mills are quoting prices well above the London benchmark and potential buyers are refusing to pay these prices. According to Reuters, traders last week closed contracts for white sugar at FOB (ship-to-ship) prices that are $10 to $15 per tonne higher than London futures markets.
Local prices in India have increased by almost 10% after the approval of exports, which has reduced the pressure on sugar mills to export. Since exports have been approved until September, Indian producers seem confident that prices will rise further. In addition, the Indian sugar industry is asking the government to increase the minimum price of sugar.
Although exports are allowed, the association of Indian sugar and bioenergy producers ISMA expects a 2024% annual decline in sugar production to 25 million tonnes by 13,8/27,6, the lowest in five years.
However, the Indian government is looking to increase the agriculture budget to boost productivity in the sugar sector, among other sectors. Reuters reports that the Indian government will allocate $20 billion to the 2025/26 agriculture budget to support rural incomes and tackle inflation. The money will be used to develop seed varieties, improve storage and delivery infrastructure, and boost agricultural production, among other things. The government-backed loan limit for farmers is also expected to be raised to 500.000 rupees (€5.775), up 66,7% from the current level.
Thai sugar industry under pressure from Chinese ban
Since December, the Chinese government has banned the import of Thai sugar syrup and mixtures, leaving shipments stuck in Chinese ports. The Thai Sugar Production Association (TSEA) expects a loss of $29,5 million due to the ban.
Although the Chinese authorities state that imports have been suspended due to concerns about hygiene in factories, the TSEA suspects that the Chinese government wants to protect domestic sugar production in this way. Both the TSEA and the Thai Sugar Millers Corporation have sent a letter to the Thai authorities urging them to accelerate negotiations with China. However, the Chinese government continues to insist that several factories be inspected before negotiations can begin.
If no deal is reached soon, Thailand’s sugar sales are likely to fall by 1 million tonnes. With storage facilities full of sugar, both local demand and prices will come under pressure. Furthermore, Thailand’s sugar production is expected to increase by 2024% to 25 million tonnes in 18/10,4, adding to price pressure.