Sugar prices rose last week from their lows in January. Production problems in Brazil and India, together with export restrictions, are supporting the price increase. At the same time, the Chinese import ban on Thai syrup could put pressure on prices. Meanwhile, German sugar producer Nordzucker ended its (exceptionally long) sugar beet campaign last week.
Sugar futures on the Intercontinental Exchange (ICE) closed higher on February 24 for the week, despite a slight decline late last week. New York closed at $464,95 per tonne, up 3,28% from the previous week. London rose 1,37% to $554,70 per tonne.
Sugar prices appear to be recovering from late January, although they remain lower than a year ago. On February 24, prices in New York were 6,76% lower and in London 9,38% lower than on February 23, 2024. Nevertheless, prices have risen 21% in New York and 18,6% in London since the low on January 18,9.
Challenges to sugarcane production in Brazil and India point to the potential for lower global sugar production. In addition, the value of the Brazilian real against the US dollar is reducing the incentive for Brazilian producers to export. Brazil’s sugar and molasses exports have fallen significantly. According to the Brazilian Secretariat of Foreign Trade (Secex), sugar and molasses exports totaled 24 million tons on February 1,2, a 59,4% decline from the previous year. The value of exports fell by 63,7% to $574,6 million.
At the same time, the ongoing ban on Thai syrup exports to China could put upward pressure on sugar prices.
Fires to impact Brazilian production until 2026
Brazil’s sugar production continues to face challenges. According to data from the sugar association Unica, sugarcane production stood at 1 billion tons as of February 1,23, down 4,9% from last year. Since January 1, no additional sugarcane has been processed in the state of São Paulo. As a result, total sugar production fell 5,5% year-on-year to 79,61 million tons.
São Paulo was hit hardest by drought and wildfires last year, affecting yields in Brazil’s largest sugarcane producing region. The effects of the fires are expected to continue into the 2025/26 harvest. The estimated loss of harvested area is 400.000 hectares, bringing the total to 7,4 million hectares. Total Brazilian sugar production is expected to reach 40,7 million tonnes in 2025/26, up 1,75% from the expected 40 million tonnes in 2024/25, according to sugar industry consultancy SCA Brasil.
Tighter sugar production in India
Despite India’s return to exports to the world market, sugar production has fallen and sugar mills are struggling to meet government-imposed export quotas. Lower sugar availability could further support prices.
The India Sugar and Bio-Energy Manufacturers Association (ISMA) has reported a 12% decline in sugar production from last year, with a total of 19,7 million tonnes between October 1 and February 15. Annual production for 2024/25 is estimated at 27,27 million tonnes, down 15% from the previous year.
China's import ban on Thai sugar syrup remains in effect
Meanwhile, China’s import ban on Thai sugar syrup and premix powder remains in place, raising the possibility of a drop in sugar prices. The Thai Sugar Products Association estimates that 40.000 tons of syrup and premix powder have been returned to Thailand from Chinese ports, with no buyers. The association estimates that the ban has caused losses of $59,5 million. In addition, sugar processing factories have been shut down for two months and no raw sugar is being purchased.
China previously demanded inspections of dozens of factories before it would begin negotiations. The Thai government has since submitted a list of sugar processing facilities inspected by the Thai Food and Drug Administration, along with information on food safety standards, but the Chinese government has yet to respond.
Nordzucker closes beet campaign after 145 days
In Europe, Nordzucker reported on February 20 that its 2024/25 campaign ended on February 15. The campaign lasted ten days longer than the previous year, totaling an exceptionally long 145 days.
Although excessive rainfall and cool spring temperatures initially slowed sugar beet growth, favorable summer conditions supported strong growth. Stable winter temperatures further contributed to good harvest and processing of sugar beets. Although yields were high, frequent summer rainfall led to slightly lower sugar content.