World sugar futures prices underwent an extraordinary bounce in mid-September, regaining much of their losses through 2024. Dry weather in Brazil has started to affect market sentiment significantly, with expected sugar production both in 2024 and 2025 being revised down by analysts.
Raw sugar futures, particularly for the most nearby contracts, have risen substantially in the past month, as shown in figure 1.
The rebound in price appears even sharper when looked at in US dollars, which the world market trades in, but currency movements through the year mean that the rebound in sterling terms has not be as pronounced.
Even contracts further out, such as the Oct-25 position which will be the contract against which the 2025 futures-linked beet contract is priced, have been uplifted, rising by c.£6/t in beet equivalent from its lowest to its highest points during September.
Consistent dry weather in Brazil has both reduced cane yields and led to lower sugar mix than many in the trade were expecting.
Earlier in the month, cane losses due to wildfires helped trigger the initial price movement, but the majority of the impact on sugar production comes from the weather’s impact on yields across the crop, and from more cane being used for ethanol production than anticipated.
Analysts’ views on 2024/25 have been adjusted noticeably in the past few months as a result – Greenpool and Globaldata for example have reduced their forecasts of Brazilian sugar production by 1.7Mt and nearly 2Mt respectively over the past three months, while in the last month alone Czarnikow has reduced its forecast of the 24/25 world surplus by 1.7Mt to 4.5Mt.
Datagro meanwhile is now forecasting a deficit in 24/25 of 1.12Mt.
Concerns for next year’s crop
The market is also starting to become concerned about the next year’s crop too. With weather patterns suggesting the world could move into La Nina conditions before the end of 2024, which tends to bring dry weather to the cane growing regions of Brazil, the dry weather could start to limit the potential for the 2025 Brazilian cane crop.
Raizen, for example, is reported as being more concerned about the impact this dry weather could have on 2025/26 than 2024/25.
As NFU Sugar appointee and independent trader Paul Harper has noted in previous Beet Briefs, the world market is heavily and increasingly reliant on Brazilian sugar for supply.
While the world sugar balance was beginning to appear in a more comfortable surplus, a large proportion of the traded sugar in the world came from this one single origin (see graph below), making the market very sensitive to weather in Brazil.
This recent episode demonstrates the potential in these conditions for the market to change rapidly based on news about the Brazilian crop.
Graph shared with permission from Czarnikow
2025/26 contract reminder
Please note beet contracting for 2025/26 with British Sugar is now open.
Last month’s Beet Brief compared some of the choices available, and NFU Sugar recently held an online Q&A session for growers to outline the key elements of the agreement and clarify some common misunderstandings – growers can email [email protected] for a copy of the recording.
British Sugar also emailed all growers on 4 October to clarify contract payment order in 2025/26.
The deadline for responding is 22 October, after which date it will not be possible to contract on the 2025 futures-linked contract.
Please remember seed purchasing is now delinked from contracting, meaning you do not need to have contracted in order to purchase seed from British Sugar.
Unless you are looking for additional tonnage, there is no downside to taking your time within this period to make a fully informed contracting decision or to monitor any further market movements prior to the deadline.
Please contact NFU Sugar if you have any questions.
