EU Sugar Market: Prices Defy Global Trends Amid Falling ICE No. 5 Futures

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Global Market Overview

The global sugar market continues to face pressure, with ICE Sugar No. 5 futures showing consistent declines across short- and long-term contracts. On January 17, 2025, all contracts closed lower, reflecting ongoing oversupply and demand uncertainties.

ICE Sugar No. 5 Prices (USD/t):

• March 2025: 478.60 (-6.40, -1.34%)
• May 2025: 477.40 (-5.60, -1.17%)
• August 2025: 466.50 (-5.20, -1.11%)
• October 2025: 464.10 (-4.60, -0.99%)
• December 2025: 467.80 (-4.30, -0.92%)

Long-Term Contracts (2026-2027):

• Losses for 2026 and 2027 contracts ranged from -0.29% to -0.74%, with minimal trading activity in these periods.

Trading Volume:

• Short-term contracts dominated activity, with 8,995 units traded for March 2025 and 6,111 units for May 2025. In contrast, long-term contracts saw limited interest.

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EU Sugar Market Dynamics

Contrary to global price declines, the EU sugar industry has maintained its upward pricing trajectory. FCA prices now range between €0.72 and €0.76/kg, depending on granulation and purchase volume. This divergence highlights the unique dynamics within the EU market.

Key Factors Supporting EU Prices:

1. Limited Imports from Ukraine:
   • The EU has allocated duty-free imports of only 100,000 tons of Ukrainian sugar. However, this quantity is insufficient to create meaningful downward pressure on prices.
   • A lack of offers from Ukraine further exacerbates the limited competition.
2. High Production Costs:
   • Rising energy prices and strict environmental regulations have driven production costs in the EU, justifying higher local prices.
3. Market Strategy:
   • EU producers leverage their strong position to maintain or increase prices, even as global markets face headwinds.

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Market Implications

1. Global Outlook:
   • With the pressure of ICE Sugar No. 5 prices, global buyers may seek cost-effective options in competitive markets, potentially bypassing the EU's high price levels.
2. EU Implications:
   • High EU prices are expected to persist unless imports from Ukraine or other countries increase significantly. Buyers within the EU face limited alternatives and continued price constraints.
3. Diverging Trends:
   • The stark contrast between falling global prices and rising EU prices underscores the regional protectionism and cost structure that shields the EU market from global trends.

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Conclusion

The sugar market is characterized by contrasting developments: falling global prices and rising EU prices. While ICE Sugar No. 5 futures continue to decline, EU prices remain elevated due to limited competition and high production costs. Market participants should closely monitor import trends and regulatory developments in the EU, as these factors will shape pricing dynamics in the months ahead.

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