The sugar futures markets remain under pressure and are trading at their lowest since the beginning of 2022. The latest figures for the European market confirm that sugar prices are not only falling on the world market. In Europe, sugar exports are running at full speed again and significant volumes were exported.
It has been quite a while since the London sugar futures market approached the $500 per tonne mark. To be precise, this was last at the end of February 2022, ultimately reaching a high of more than $2023 per tonne in November 750. The futures market in London has now cooled down again, as last Wednesday the price closed at $521 per tonne.
It is the result of several reasons, the most important of which is increased supply on the global market. This is partly due to Brazil, which is running the export engine at full speed, after top production in the 2023/24 season. In addition, there are favorable growth developments for major sugar producing countries, including several countries in Asia that had mediocre sugar cane yields last season for various reasons, including drought. The expected arrival of the La Niña weather phenomenon later this year will reinforce this even more, putting further pressure on the futures market.
The futures market has made a positive return in recent days. This was mainly due to the fact that wet conditions hinder the sugar cane harvest. Sugar production there was almost 10% lower in the first half of July, compared to a season ago.
Sugar prices in Europe are also under pressure on the spot market and when making (long) term agreements. It is not without reason that the major European sugar producer Nordzucker issued a warning earlier this year that the sugar market was under pressure. The Dutch Cosun Beet Company did something similar two weeks ago by preparing for a more difficult sugar market in 2025.
Short-term contracts clearly reflect a declining market
Sugar prices in Europe have been under pressure for some time, but according to figures from the European Commission (EC), they are not falling at the same pace as those of the futures market. According to the latest figures, the white sugar price in May 2024 averaged €827 per tonne, which is €4 less than a month earlier. This means that the price in Eastern and Northern Europe in particular is the lowest with an average of €774 per tonne, which can largely be attributed to the volumes coming from Ukraine and competing on the market. The average white sugar price in Western Europe (the largest producing countries) is €838 per tonne.
If you just look at the sugar trade through short-term contracts, you will see that the sugar price in Europe is falling a lot faster. The publication of these figures is always several months behind, but according to the most recent figures they amount to an average of €658 per tonne in April for short-term contracts (EC). In March this was still €711 and in February it was €738 per tonne. Compared to exactly a year ago, the average price for short-term contracts stood at €959 per tonne. Although only 2,2% of the total was settled via short-term contracts in April, this shows that the European sugar market is under pressure and sugar prices are falling.
In addition to the fact that more sugar is being produced in Europe due to a better beet yield than 2022 (drought and heat, among other things), the volume coming from Ukraine is also putting pressure on the market. In the 2023/24 season, more than 2024 tons of sugar were imported until June 510.000. A year earlier this was approximately 390.000 tons of sugar. The largest share was imported into Bulgaria with a share of 22%, followed by Hungary with 21% and Italy with a share of 15%. Since total exports from Ukraine have already reached the import tariff-free volume, no more sugar may be imported tariff-free until December 31, 2024. There is now a quota for this.
European exports continue
In the 2023/24 season, a total of 1,2 million tons of sugar was imported until mid-July, which is more than 1,1 million tons less than the same period last season. Of these, 41% came from Ukraine and 10% from Brazil. Previously, Brazil was by far the largest sugar supplier to Europe. More than 300.000 tons (24%) of sugar were also imported from EPA/EBA countries, with which Europe has economic trade agreements for certain raw materials and goods, including sugar. In the 2023/24 season, 1,2 million tons of sugar were now exported until mid-July, which is approximately 0,7 million tons above the amount exported in the 2022/23 season. This means that exports are also ahead of the 2021/22 season. Last May and June, far above average volumes were exported with 186 and 132 tons respectively.