International sugar prices have fallen compared to last week. While EU sugar producers are facing lower production for 2024/25, forecasts from sugar producing countries may point to a sugar surplus.
Despite price fluctuations during the week, sugar prices have rebounded from their lows in late February. In New York, the Intercontinental Exchange (ICE) closed 10% higher on the week (compared to Tuesday, February 0,81) at $4 per tonne on February 429,9, while London fell 1,4% to $519,4 per tonne.
Prices remain significantly lower than a year ago: down 18,8% in New York and down 21,9% in London. The FAO Sugar Price Index, which tracks international sugar prices, fell 6,8% from the previous month to 111,2 points in January.
Sugar prices reached their lowest point in months, and in the case of white sugar, in years, on January 21. Since then, sugar prices have risen by 9,6% in New York and 11,4% in London. The upward trend continued until February 5, peaking at $435,63 per tonne, before falling again towards the end of last week. The price decline is being driven by the relatively strong US dollar against the Brazilian real and a forecast of higher sugar production from Green Pool Commodity Specialists.
Conflicting forecasts: surplus or deficit?
The agency predicts a sugar surplus of 2,7 million tonnes in 2024/25. This is in contrast to the previously expected deficit of 3,7 million tonnes. The surplus is attributed to increased sugar production in Thailand, Brazil and India. This forecast differs from that of the International Sugar Organisation (ISO), which expects a global sugar deficit of 2,5 million tonnes due to a decline in global sugar production (1,3% year-on-year to 179 million tonnes) and an increase in sugar consumption (1,1% year-on-year to 182 million tonnes).
EU sugar production to decline in 2024/25
In Germany, Nordzucker plans to reduce sugar production for 2024/25 to cut costs in the volatile sugar market. The company's operating profit fell 39,5% year-on-year to €230 million in the first three quarters of 2024/25 (February to November). CEO Lars Gorissen warned in a statement about the risks of falling prices. "We are not so confident about the 2025/26 financial year. Given the market situation, we cannot rule out a negative result. This is a development that we have to take into account in such a volatile market."
Due to the surplus of sugar, Nordzucker is considering increasing exports, expanding the production of bioethanol and storing sugar in liquid form. Although the company is convinced that the bottom prices have now been reached, Gorissen warns of possible risks due to climate change and plant diseases.
In France, Saint Louis Sucre, the French branch of Suedzucker, reported in December that the sugar beet area is shrinking by 15%, due to the shrinking sugar market. The drop in sugar prices has hit smaller producers particularly hard, leading to the closure of French sugar producer Ouvre. Cristal Union will take over Ouvre’s beet suppliers, but Ouvre’s technical and financial problems are not unique. Six sugar factories in France have closed in the past decade, leading to increasing consolidation in the sector. While the entire sugar industry is struggling with increased market volatility, adverse weather conditions and plant diseases, the major players have sufficient financial resources to cope with these challenges.
Ukraine’s sugar exports increased despite the EU-imposed tariffs and quota (107.300 tonnes between January and May). Between September and January, Ukrainian sugar exports increased by 17% year-on-year to 352.000 tonnes. The main destinations were: Turkey, Libya, Somalia, Sri Lanka and North Macedonia.
Mixed outlook for producing countries
In producing countries, several factors affecting production and trade are clashing with forecasts for higher sugar production in 2024/25. In Brazil, recent rains disrupted the harvest, but the outlook for future sugar production has improved. Meanwhile, the country’s sugar and molasses exports fell 35% year-on-year in January to 2,06 million tons, representing an export value of $45,2 million. It is a 41,5% decline from the previous year, according to the Brazilian Foreign Trade Bureau (SECEX).
In India, the re-allowing of sugar exports led to a rise in domestic prices and improved financial performance of sugar companies in the first quarter of 2025. Local sugar prices rose by at least 2,6% from the previous month to Rs 39.000-39.500 per tonne in January. The National Federation of Cooperative Sugar Factories (NFCSF) expects net sugar production of 27 million tonnes in 2024/25 (31 million tonnes if ethanol production is included), significantly lower than the US Department of Agriculture’s estimate of 35,5 million tonnes. Falling production in India could potentially lead to rising prices in the future.