Analysis Sugar
Lower Südzucker profit, but better than expected
Sugar futures have fallen in price on both the London and New York futures markets, due to a stronger US dollar and lower Brazilian sugar exports. However, supply constraints could support prices going forward. Despite better-than-expected performance, Südzucker reported a sharp drop in profits and expects modest results for the coming season.
Sugar futures contracts fell on the Intercontinental Exchange (ICE). In London, white sugar prices closed at $24 per tonne on March 542,40, down 3,97% from the previous week and 15,43% year-on-year. On the same date, raw sugar in New York closed at $424,61 per tonne, down 3,56% from a week earlier and 12,26% from the same period last year.
A major factor in the decline over the past two weeks has been a stronger US dollar against the Brazilian real, which has led to lower supplies and is contributing to downward pressure on sugar prices.
Despite the decline, sugar prices remain within the range observed so far in 2025. In addition, there are indications of upward price pressure due to tight global supply.
Mixed signals in the Brazilian market
Brazil’s sugar production is showing a decline, pointing to a possible overall decline in the 2024/25 harvest. According to sugar association Unica, sugar cane processing stood at 1 billion tons on March 1,23, down 5,01% year-on-year. Sugar production followed a similar trend, falling 5,58% year-on-year to 79,64 million tons over the same period.
Brazil’s sugar exports also declined in March. In the third week of the month, daily exports of sugar and molasses fell by 32,2% year-on-year, averaging 90.648 tons per day. The export value also fell to $43,52 million per day, a 37,7% year-on-year decrease. The average export price of sugar and molasses fell by 8% year-on-year to $480,10 per ton.
Looking ahead, the market is showing mixed signals. On the one hand, trader Czarnikow predicts that Brazil’s sugar production will reach 2025 million tonnes in 26/43,6. On the other hand, consultancy Pecege predicts a 1,44% year-on-year decline in production in the central-southern region, which is 609,4 million tonnes in the same period. Brazil’s sugarcane sector is still recovering from the damage caused by extreme weather in the previous season.
At the same time, the Brazilian government is considering increasing the ethanol blending percentage from 27% to 30%, which would reduce the need for gasoline imports. If implemented, this measure would increase ethanol demand by 16% in 2025/26. This could support sugar and ethanol prices in the coming market year.
Meanwhile, US proposed tariffs are causing tensions with Brazil, affecting trade in ethanol and sugar. While the US criticizes Brazil’s tariffs on ethanol, Brazilian officials stress that ethanol is traded alongside sugar. Finance Minister Fernando Haddad indicated that Brazil is awaiting formal proposals from the US and is working on a detailed trade balance to support negotiations.
India: Supply concerns despite export activity
In India, too, the market situation is complex. Earlier this year, the Indian government approved the export of 1 million tonnes of sugar through September. According to Reuters, 60% of that volume has already been contracted, with 250.000 tonnes already shipped by sugar mills. However, many mills appear reluctant to sign additional contracts, possibly in anticipation of better prices.
Meanwhile, India’s sugar production is expected to fall short of domestic demand. The All India Sugar Trade Association (AISTA) estimates demand at 26 million tonnes in 2024/25, while the supply forecast is 25,8 million tonnes. In contrast, the Indian Sugar and Bio-Energy Manufacturers Association (ISMA) expects a slightly higher supply of 26,4 million tonnes, which exceeds expected demand.
In addition, ISMA expects sugar reserves to reach 2025 million tonnes at the start of the 26/5,4 season in October, ensuring availability for the domestic sugar and ethanol market at the start of the season. AISTA, on the other hand, predicts lower stocks, with an estimated decline of 52,75% year-on-year to just 3,78 million tonnes at the start of the 2025/26 season.
European Commission investigates imports from Ukraine
According to Reuters news agency, the European Commission is considering restricting imports of Ukrainian sugar – among other products – due to concerns from EU farmers about low prices. After the outbreak of war in 2022, the EU removed trade restrictions, increasing sugar imports from Ukraine from a quota of 20.000 tonnes to 500.000 tonnes in the 2023/24 season. In response to concerns from European farmers, a revised quota of 262.650 tonnes was introduced in July, prompting Ukraine to explore alternative markets such as Turkey. Ukrainian authorities have expressed hope for a fair solution that benefits both Ukraine and the EU.
Südzucker: profit falls despite better than expected results
German sugar producer Südzucker published preliminary financial results on March 18. The company reports a turnover of €9,7 billion for 2024/25, with an Ebitda (gross profit) of €715 million. While this is above the previous guidance of €550 to €650 million, it represents a decrease of 37,17% compared to the €1,138 billion of the previous year. In view of the lower profit, the board of directors proposed a dividend cut of 77,78% to €0,20 per share.
For the next season, Südzucker expects a modest decline in profits, with EBITDA between €525 million and €675 million for 2025/26.
Santiago Morales Hilarion
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