Analysis Sugar
EU sees need to protect internal sugar market
Good yields can have a downside for producers. This is a factor in the European sugar market to some extent. The beet acreage in the EU will have shrunk by approximately 8% in the 2025 crop year, but sugar production will have declined less sharply. Consequently, there is an oversupply of sugar. This problem is not unique to Europe, judging by developments on the London and New York futures markets.
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Choose the subscription that suits youThe international sugar market is under considerable pressure. On the New York Stock Exchange, sugar fell to its lowest level in two and a half months. On the London futures market, sugar prices even closed at their lowest level in five years last Friday.
The sugar campaign has concluded in the Netherlands. Yields were generally good. Cosun reports an average yield of 15,6% sugar per hectare. The USDA estimates sugar production across the EU at 15,3 million tons. This means sugar production is 1 million tons lower than last season. This is mainly due to an 8% reduction in acreage. Due to good sugar beet yields in the EU, sugar production could be higher than currently anticipated, according to some analysts.
Reference price under pressure
The European reference price for sugar was under pressure, partly due to these strong returns. In December, sugar averaged €518 per tonne on the internal market, according to the report of the latest sugar consultation held in Brussels last week. This means the sugar price is €141 per tonne, or 28% lower than in December 2024. Given these developments, it's not surprising that some in the sugar sector are calling for Europe to take action.
The European Commission has proposed temporarily suspending the Inward Processing Regime (IPR), which allows companies to import sugar duty-free for processing and export outside the EU. With this proposal, Europe aims to alleviate pressure on the internal sugar market. Sugar prices in the European internal market have been under pressure for some time, and producers and growers complain about unfair competition. Last year, imports of raw sugar under IPR increased by 19% compared to the previous season to 587.000 tons. Ninety-five percent of the sugar imported under this regime came from Brazil. Imports of white sugar rose by 5% to 155.000 tons. Of this, 43% came from Brazil. The remainder came from countries including Morocco, Egypt, and Ukraine.
Unfair competition
European sugar beet producers have expressed concerns about unfair competition and the potential consequences of the Mercosur trade agreement between the EU and South American countries. Under the agreement, South America would be allowed to sell more sugar to the EU. European producers argue that sugar imports are undesirable given the current market. Comments from the European sugar sector suggest that everything currently entering the EU is already too much.
Brazil's sugar production was slightly higher in December. Sugar production rose by 0,9% to 40,22 million tons, according to Unica statistics. The ratio of sugarcane to sugar processing increased from 48% in the 2024/25 season to 51% in the 2025/26 season. The last sugar harvest estimate in Brazil from Conab (the agency of the Brazilian Ministry of Agriculture) dates back to November, but at that time it expected a record harvest of 45 million tons. Market bureau Safras & Mercado's latest forecast was slightly lower, at 43,5 million tons for the 2025/26 season. For 2025/26, Safras & Mercado predicts a harvest of 41,8 million tons, of which 30 million tons will be exported.