EU average white sugar prices have continued to drop, with the average sales value reported at €580/t in Dec-24, €276/t lower than a year ago.

In a sign of the comfortable supply situation in the EU market for 24/25, spot prices are reported even lower, with the latest EU Commission data showing spot sugar sales achieving c.€80/t less than the average return (see figure 1).

The EU sugar market tends to be a good guide to trends in UK sugar prices, which are not reported.

This comes on the back of a rebound in production in the EU combined with the highest opening stock levels since 2020 – together, this ‘readily available’ sugar supply was the highest reported by the EU Commission since it began reporting EU27 statistics (figures before 2020/21 include the UK so are not readily comparable).

The UK market is likely to have been in a similar position, though the data are not reported.

EU sugar imports lower

As a result, EU sugar imports (excluding IPR) have been very low compared to previous years – 135kt in Oct-Jan (a quarter of which is from the UK, supplying Ireland for example) – and exports higher – 526kt in the same period.

If the full year reflects these first four months, net exports would exceed the EU Commission’s forecast of c.1Mt by about 100Kt.

For 2025/26, the volume of net exports out of the EU matters because it directly impacts stock carry from this campaign into next.

The EU market came into 2024/25 with the highest opening stock level since 2020/21, so although a significant area cut is anticipated across Europe in 2025, a high stock carryover (which is readily available and needs to be cleared for new production) would put pressure on processors to sell and therefore could be a drag on prices.

On the other hand, a lower stock carryover would accentuate the impact of reduced production next year.

The EU Commission forecasts stocks drawing down from 2.1Mt to 2Mt, but this would still be above the five-year average carry in stock level of 1.8Mt – however, any additional net exports compared to their forecast could lower this figure.

The big unknown is consumption.

Consumption has been slightly falling in recent years in the EU for many reasons, but some forecasters, such as Globaldata, project an increase in 2024/25. If this were to happen, it would further tighten the supply picture ahead of 2025/26 (GD forecast a carryover of 1.6Mt, for example).

World sugar prices fall

On the world market, prices have fallen and rebounded in the past month (read more from Paul and WABCG below).

A lot has been made of the positions of speculative funds, with the funds holding their largest net short in five-years (see figure 2).

This means that traders in the futures market without a need for physical sugar hold, on balance, a large number of sold contracts, so will need at some point to buy back these positions to avoid ending up with sugar delivered.

As Paul notes, an impact of this could be to further increase the sugar futures market price before the March 2025 contract expires.

However, the flipside of this is that producers in the market have hedged an unusually low amount of sugar to date, while purchasers are well hedged comparatively.

This could have the opposite impact on prices later in the year, as sugar producers in the world market will be expected to sell or hedge their production at some point. With physical buyers potentially already better hedged, the pressure could be higher on the selling side of the market in this scenario, hence the risk to prices.

Fundamentally, however, as noted in both pieces below, the bigger impact of prices later in the year could well come from crop results in key producers like Brazil and India, especially if these differ from what the trade is currently expecting.

A trader’s view

NFU Sugar Board appointee and sugar trader Paul Harper shares his thoughts on the current market situation.

Further increases in the premium may need to be seen to encourage the stand-alone refineries to produce additional white sugar, which in turn would increase demand for raw sugar.

Weather continues to be the main risk for the market and, as we move into the second half of the year, this may well be the deciding factor as to whether or not the recent increase in prices can be sustained.

The WABCG view: January – stop... and go?

Taken from the World Association of Beet and Cane Growers’ Flashmarket newsletter on 5 February, by Timothé Masson, Executive Secretary of WABCG and economist for the French beet growers association, CGB.

First of all, the geopolitical context is feverish. The markets were chaotic over the month, giving, at best, an impression of convalescence: cereals performed well (maize gained 6%, wheat 4%), giving ethanol an opportunity to bounce back (+6% in the USA) despite the surprising stability of oil.

Currencies are recovering slightly but remain groggy from the strength of the dollar (+4% for the Brazilian Real over the month, but still at historically low levels, close to 6 BRL/US$), and freight is losing a quarter of its value.

With this in mind, the sugar market is surprising: almost stable when comparing the end of December and the end of January. But what if this masks a trend reversal? Well, it could be the case when trying to understand what happened during the month.

The world market was above 19c/lb at the start of the month when the announcement by the Indian authorities on 21 January that one million tonnes of sugar would be authorised for export caused sugar prices to plunge below 17.6c/lb during the session, a level not seen for three years.

This fall is linked to speculators: they suddenly increased their selling positions, to 7Mt of sugar – an unprecedented level over the past five years!

But, in a few days, the market recovered and is now above 19c/lb. Probably because analysts realised that the Indian announcement will have no impact on world balance sheets: if this quantity of sugar leaves the Indian balance sheet, the country's stocks will, according to S&P, fall below 5Mt at the end of September 2025: a level not seen for ten years – with a powerful bullish effect in the long term.

Moreover, the fundamentals remain very robust; on 4 February, S&P revised its world balance sheet for 2024-25 (October-September) with an estimated deficit of -2.0Mt, and a similar situation for 2025-26: -2.3Mt.

But what is interesting is that, within this event, speculators haven't moved, they're still net sellers! As a result, their position is becoming a bullish factor for the market.

And it also illustrates that the market is holding up very well: the low Real is not changing much, and demand seems to be holding up. The white premium (the difference between refined and raw sugar) is approaching $100/t again - it had fallen below $75/t in the middle of the month.

In short, it's a very febrile market, and it's very likely to stay that way... at least until Brazil starts its campaign next April?