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Michael

Dec 4, 2024

Sugar Market Update: ICE Futures Rise Amid EU Surpluses Putting Pressure on Prices

Sugar Market Update: ICE Futures Rise Amid EU Surpluses Putting Pressure on Prices

Sugar Market Update: ICE Futures Rise Amid EU Surpluses Putting Pressure on Prices




1. Current Prices and Developments

  • EU Sugar Prices (Category II): Stable at €0.51–0.53/kg FCA, under pressure from surpluses.
  • ICE Sugar No. 5 (March 2025): The closing price on December 3, 2024, rose to $553.20/t (approximately €508.94/t), a daily increase of +0.99%.
  • Ukrainian Sugar: Duty-free imports into the EU will be allowed starting January 2025 (limited quantities). Current FCA prices stand at €0.42/kg, though high transport costs make these less attractive.





2. International Influences

  • Brazil: Weather-induced production declines are weighing on exports. A modest recovery is expected for 2025.
  • India: Lower export availability due to growing domestic demand.
  • Ukraine: Dumping prices below €0.40/kg for uncertified sugar could disrupt markets.





3. Production, Consumption, and Surpluses

Sugar production and consumption vary significantly by region, and surpluses are either exported or utilized for ethanol production:
  • Brazil:
    • Production: 40 million tons
    • Consumption: 10.6–12.7 million tons
    • Surplus: 27.3–29.4 million tons (the world’s largest exporter, significant for ethanol)
  • USA:
    • Production: 7.5–8 million tons
    • Consumption: 11.7 million tons
    • Surplus: -3.7 to -4.2 million tons (deficit covered by imports)
  • India:
    • Production: 30–32 million tons
    • Consumption: 27.6–29 million tons
    • Surplus: 1–4.4 million tons (moderate exports, regional use)
  • EU:
    • Production: 15 million tons
    • Consumption: 9 million tons
    • Surplus: 6 million tons (key role in exports and industrial applications)
These surpluses heavily influence market dynamics, particularly exports and price formation.




4. Outlook and Trends

  • EU Surpluses: Price pressure persists, exacerbated by rising competition from Ukrainian imports.
  • ICE Sugar No. 5: Rising futures prices signal higher demand and speculative activity.
  • Weather Risks: Brazil remains a key indicator, heavily influenced by climate conditions.





5. Recommendations

  • For Traders: Exercise caution with low-priced Ukrainian offers.
  • For Producers: Align pricing strategies with ICE Sugar No. 5 benchmarks.
  • For Risk Management: Consider futures or long-term contracts to mitigate volatility.





The surpluses in significant markets like Brazil and the EU remain pivotal for exports and industrial uses. With rising ICE Sugar No. 5 futures and pressure from EU surpluses, the market remains volatile. Stay tuned for further updates.
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