Global Sugar Prices Under Pressure: ICE No. 5 Declines Amid Supply Surplus and Market Uncertainty

Sugar Market Analysis: Declining ICE No. 5 Prices Amid Mixed Market Signals

The sugar market witnessed a notable drop on Friday, as ICE Sugar No. 5 prices experienced a bearish trend. The March 2025 contract declined by 8.40 USD, closing at 547.70 USD/t, marking a 1.53% decrease. Similarly, the May 2025 contract dropped 7.90 USD, ending the session at 545.40 USD/t, a 1.45% fall. The August 2025 contract closed at 534.80 USD/t, shedding 6.70 USD or 1.25%. Across the board, contracts for later delivery followed suit, with losses ranging from 1.03% to 1.82%.

In EUR terms, reflecting the exchange rate of 1.07 USD/EUR:

• March 2025 contract: 511.40 EUR/t
• May 2025 contract: 509.72 EUR/t
• August 2025 contract: 500.75 EUR/t

The pressure on prices is attributed to several factors:

1. Global Supply Dynamics: Robust production in critical regions continues to weigh on prices. Brazil, the world's largest sugar producer, reports favourable output, while India’s sugar exports remain steady despite increased domestic ethanol blending.
2. Currency Fluctuations: The strengthening of the USD makes sugar exports from other regions more competitive, impacting ICE No. 5 contracts.
3. European Market Outlook: EU sugar prices remain elevated, ranging from 0.51–0.53 EUR/kg FCA for EU Category II sugar. Although Ukrainian sugar is priced at 0.42 EUR/kg FCA, it is a stabilizing factor despite its limited appeal due to high transport costs and potential quality concerns for uncertified offers.

Key Market Observations:

• Speculation Pressure: As financial investors adjust their positions on futures, profit-taking and risk reassessment have exerted downward pressure on prices.
• Demand Factors: Although global consumption remains robust, significant stock levels in Europe and expectations of stable Ukrainian imports dampen bullish sentiment.
• Short-Term Outlook: Market participants are now eyeing the start of 2025, when demand dynamics and potential shifts in EU trade policies (e.g., import duty adjustments for Ukrainian sugar) could reshape the pricing landscape.

The ICE sugar market's reaction reflects supply-side pressures and uncertainties surrounding demand and regional trade conditions. As the new year approaches, key developments in production, trade, and policy will play a pivotal role in determining price trajectories.