After two consecutive strong increases in European beet area, and with decent (if not spectacular) beet yields on average, the EU+UK is forecast to be a net exporter in 2024/25 for the first time since 2017.
Current sales prices for remaining unsold 2024/25 sugar are reported to be around export parity at c.€500/t, and well below the mid-€800s sugar prices seen in 2023/24.
However, it is widely expected that European beet area will fall in 2025, allowing Europe to rebuild its price premium to world market, though it is not clear by how much.
Sugar producers across Europe have made public statements indicating their expectations of area falling in 2025:
Südzucker: “In the 2025 cultivation year, Südzucker will reduce its beet area by an average of around 15% across its national subsidiaries.” This will be achieved by limiting the amount contracted with growers – Südzucker’s growers have a basic delivery right, similar to Contract Entitlement in the UK, and usually contract an additional volume above that which does not accrue ongoing entitlements (Mehrrüben), but in 2025 “No growing of Mehrrüben is possible in south Germany”.
Nordzucker: “For the coming year, we have adjusted our beet delivery contracts to the market situation and will produce a smaller quantity in 2025. This is a contribution to the gradual normalisation of the market.”
Betodlarna (Swedish beet growers’ association, in relation to their agreement made with Nordic Sugar): “Due to a pressured market situation in Europe, Nordic Sugar is reducing the production volume in 2025 compared to 2024, and thus the total area available to contract. The reduced production corresponds to a reduction of about 9%.”
ABF, in their annual results investor webcast: “We would much rather see a smaller crop in Europe and think we’ll get it because acreage will come off by a fair amount.”
EU27 beet area and 2025 scenarios
There are also reports in the trade of similar reductions quoting sources including Pfeifer and Langen (Germany), Cosun Beet Company (Netherlands) and beet industry sources in Poland, while NFU Sugar has also heard expectations of lower area in 2025 from grower associations across Europe.
Notably, however, there have been no public statements or reports from the two large sugar co-ops in France, the continent’s primary sugar producer alongside Germany.
However, some of this could prove to be ‘talk’ and not as large as the actual area reductions in different countries, not least since planting decisions are ultimately in the hands of more than 100,000 individual beet growers across Europe rather than the handful of sugar processors they are members of or contracted to.
The general view among analysts and the trade appears to be that the overall European beet area will fall by around 5%, but with a lot of uncertainty.
European beet area has never reduced by more than 5% in a single year in the post-quota period (see figure 1), but assuming average yields and no change to sugar consumption in 2025, an area cut of just c.1% across Europe (or c.2% if looking only at the EU27 balance) would shift the market back to a net import position.
As part of the European market, a reduced beet area across Europe in 2025 would be expected to support UK sugar prices in 25/26 (see below).
Unless the area reduction is at the very low end (i.e. if the statements from industry prove to be vastly overblown), sugar prices in Europe would be expected to rebuild their premium to the world market in 2025/26 based on the market’s need to attract imports.
The table below shows indicative reference price levels for the 2025/26 MLB (Market-Linked Bonus) beet contract based on current futures market prices – but bear in mind any changes to the underlying world market could shift these figures substantially.
| EU area cut scenario | 2025/26 European market balance on average yield | Reference point for 2025/26 MLB contract value at current futures prices* |
| -2% | Roughly balanced/export parity | £30.70 (i.e. no MLB currently expected in this scenario) |
| -5% | Duty-free import parity | £31.50-£34 |
| -8% | Duty-free import parity | £31.50-£34 (more likely to be at upper end) |
| - >10%+ | CXL (duty-paying) import parity | £35+ |
*Reference figures based on current world sugar futures prices for 25/26, based on Globaldata expectations for European sugar price premiums. Actual European sugar prices will be established when sugar is sold for 25/26, which is unlikely to happen until mid-2025.
A trader’s view
NFU Sugar Board appointee and sugar trader Paul Harper shares his thoughts on the current market situation.
NFU Sugar Board appointee Paul Harper
Paul has spent his entire career in commodities and has been in sugar since 1976. He joined C Czarnikow in 1973 working in their London, New York and Singapore offices. Paul has a huge amount of consultancy experience, having consulted for a hedge fund, major bank and a large trade house in sugar during that time.
Price movements over the past few weeks have largely been due to the more speculative element trading from long to neutral positions (i.e. selling sugar futures) with little change in the overall fundamental situation.
Statistically there remains a deficit in the first quarter of next year and this is reflected in the high premium that the Mar-25 raw sugar futures-contract is trading at over contracts for later delivery.
As we move through 2025, assuming weather conditions remain favourable, the market should move into surplus and it is my view that it is unlikely to achieve the same price levels as seen in 2024.
India, Thailand and Brazil are all expected to have sufficient supply, although at current cane production levels India will likely produce more ethanol in 2025 and therefore remain side-lined as far as sugar exports are concerned.
The market will again look to Brazil to satisfy most of the demand which, as we have seen this year, could lead to problems should any sudden changes happen.
European sugar remains under pressure and the crop for 2025 appears to be progressing well. If prices continue to remain weak it is expected by the trade that a reduction in acreage will be seen in the 2025/26 crop.
Overall, the market continues to trade in a 2c/lb range in world raw sugar futures and, in the short-term, it would seem that these trading conditions are likely to remain in place.
Any change in the supply for the first quarter will dictate the market movement and if there is sufficient requirement for the sugar supply available against the March 2025 then a short-term rally could ensue.
It is this trader’s view that as the market moves into surplus, major price improvements are unlikely unless there are any difficulties in supply.
The WABCG view: sugar market catches its breath
Taken from the World Association of Beet and Cane Growers’ Flashmarket newsletter on 7 November, by Timothé Masson, Executive Secretary of WABCG and economist for the French beet growers association, CGB.
We all remember September, when the sugar market soared by a record 20% in one month! In October, however, the market seems to have taken a deep breath, remaining stable throughout the month.
But behind this stability there were two important developments.
The first concerns speculators: they are no longer supporting the market. In fact, it is the opposite: after starting the month as net buyers of sugar (+0.7Mt), they ended the month as net sellers (-0.7Mt) – and so far this has not had a bearish effect on the market – excellent news!
The second concerns Brazilian currency & oil: their movements during the month should have penalised the value of sugar. Once again, this was not the case. On the one hand, a barrel of Brent crude lost more than 8% in value over the month and, on the other, the Brazilian real lost 3.5% against the dollar. BRL is now approaching 5.99 per US dollar: a 20% fall in one year and a new all-time record that will allow the South American giant to become more competitive in the export market... at least in the short term.
The stability of the sugar market over the month (-0.6% for refined sugar, -0.4% for raw sugar) therefore looks like a consolidation of September's gains. This is probably because analysts believe that the start of the Asian sugar season (India, Thailand) will not lead to an influx of sugar onto the world market. In fact, any Indian surplus should only be used to meet the country's bioethanol target (20% bioethanol in fuels by 2025). S&P Global has revised its 2024-2025 (Oct/Sept) global balance downwards to a surplus (+2.0 Mt) before turning to a deficit in 2025-2026, currently estimated at -2.0Mt.
Finally, sugar's stability must also be seen in the context of falling cereal prices (-2% for maize, -3% for soya and -5% for wheat) and even freight prices (-5% for supramax). In short, the stability of sugar prices in October is a remarkable achievement – almost as remarkable as September's performance!