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)
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.