It is Brazil that sets the records with sugar production and exports. In addition, production expectations in Asia have improved, European production has increased and there are higher sugar imports from Ukraine. A further reduction in the sugar price in Europe is likely, but concerns about a sugar shortage continue to simmer, especially at a global level. In Europe, the French sugar producer Tereos only expects limited growth in sugar beet acreage next season, despite the good yield of sugar beets.
Olivier Leducq, CEO of the French sugar producer Tereos, sees the European beet area increasing by only 2% to 3% in the coming season, despite a good return thanks to the increased sugar price. During the sugar conference in Dubai, he indicated that European sugar beet growers consider the cultivation to be a major risk. Cultivation has become significantly more expensive in recent years, while good yields are far from self-evident due to a more erratic climate with drought. In addition, the risk of disease increases because the resource package continues to decrease. This also leads to lower yields, which is why Tereos only sees a slight increase in beet cultivation in Europe in the coming season.
Brazil sets the tone
Concerns about the global sugar shortage have subsided in recent months thanks to the highly successful sugar production in Brazil. The world's largest sugar producer has produced 42,2 million tonnes of sugar in the 2023/24 season, according to the latest figures from Brazilian sugar industry association Unica, a record amount. The record fully compensates for the lower sugar production in Asia, which suffered from the weather phenomenon El Niño last season, which brought drought. Brazil also supplements this elsewhere in the world where there is more demand for sugar. The export volume - to once again indicate how much the country exports - has broken another record this season with more than 32 million tons of sugar. It is therefore not without reason that concerns about a shortage have diminished.
Yet sugar prices on the spot markets in several countries are only declining steadily or even remaining stable. Sugar quotes on the futures market alternate between profits and losses, but they do not (yet) show a gradual decline. The quotation is even picking up again. However, according to analysts, the peak price was reached in November, when the futures market in London shot past $760 per tonne, reaching the highest level in almost twelve years. Yesterday (Monday, November 18), the white sugar contract closed at $628 per tonne.
Sugar deficiency continues to lurk around
Concerns about sugar production remain simmering at a global level and are currently keeping sugar prices in check. The International Sugar Organization ISO predicted a global sugar shortage of more than 600.000 tons of sugar at the beginning of March, although some market agencies are more positive. The fact is that Brazil expects high production again in the 2024/25 season, but the drought that has been prevailing for a long time is taking its toll in the growing season. Brazilian Datagro confirmed this last week, which is seeing lower production than last season's record. It will also be dry in the coming period. In addition, the 'limited' export capacity of the country is discussed, but despite long waiting times in the ports, volumes are finding their way.
On the other hand, sugar production in Asian countries is disappointing, partly due to the drought created by El Niño. However, the latest reports in India are less negative about sugar production. This was increased last week by the Indian sugar industry group ISMA to 34 million tonnes, up from 33 million earlier this season. Analysts expect that this will not change the export ban that still applies to the world's second largest sugar producer. In Thailand, another major sugar exporter, no improvement in production is expected.
Developments elsewhere in the world have an effect on the European sugar market, but Europe also follows its own path with its own production and import and export. European sugar prices on the spot market currently remain under some pressure. Because more was produced than a season ago, but also because of the import-free sugar import from Ukraine. In addition, European sugar prices on the spot market were also extremely high (rising past €1.000 per tonne last summer).
Recently, the suspension of import duties and quotas on Ukrainian agricultural products (including sugar) was extended again for one year. This attracted criticism because it could disrupt the EU markets. A proposal soon followed to make adjustments to a number of products already disrupted by increased imports from Ukraine, including sugar. The European Parliament finally agreed to this last week. For example, levies must be paid if Ukraine imports more than a certain quota and additional measures can be taken if an EU member state is still inconvenienced by imports from Ukraine.