"Sugar Market Softens – EU Prices Remain Stable as Demand Stays Weak"

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Closing Prices on January 31, 2025 (ICE Sugar No. 5) Converted to EUR

Using a USD/EUR exchange rate of 0.92, the latest closing prices for ICE Sugar No. 5 in EUR are as follows:

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Market Analysis: Downward Correction After Recent Rally

After a period of strong price increases, sugar prices are softening, signalling possible market stabilization:

1. Noticeable Declines in Short-Term Contracts:
   • The March 2025 contract dropped -0.62% to €477.94/t, showing its first significant decline after a strong upward movement in recent weeks.
   • The May 2025 contract also fell -0.22% to €461.93/t, indicating a cooling off in short-term demand.
2. Minor Weakness Across All Contracts:
   • While long-term contracts saw only marginal losses (-0.02%), the consistent declines indicate that the bullish trend may be losing momentum.
   • The August 2025 and October 2025 contracts fell by -0.39% and -0.33%, reinforcing a softening pattern.
3. Potential Reasons for the Market Pullback:
   • Traders may be profiting after the recent rally, causing a short-term decline.
   • Global supply concerns have not worsened, reducing pressure on buyers to rush into contracts.
   • Seasonal factors, such as preparations for Easter, might not yet exert full influence on the market.

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EU Sugar Market: Stability Amid Weak Demand

• The EU sugar market remains calm, with no price changes reported.
• Prices remain between €0.50/kg and €0.54/kg FCA EU, with demand remaining weak.
• The lack of movement in the EU market is likely due to large buyers already securing contracts, meaning there is no urgent purchasing activity.
• Market participants estimate that around 30% of total sugar volumes remain uncovered, indicating that some buying activity is still expected in the coming months.

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Market Outlook

📉 Short-Term:

• The recent downward move suggests that prices might stabilize or decline slightly in the coming sessions.
• However, supply chain disruptions or sudden demand surges could trigger another price increase.

📈 Long-Term:

• If global stocks remain steady and demand does not increase significantly, the market could enter a sideways trading phase.
• The Easter buying season could still play a key role in shaping price movements in February and March.

🔍 Strategic Recommendations:

• Buyers should remain cautious, as the market is currently experiencing a natural correction.
• Producers should monitor global trends closely, as further price drops could impact profitability if not anticipated.

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Conclusion

The sugar market is seeing its first meaningful decline after a strong upward rally, indicating potential price stabilization. While short-term contracts saw more noticeable drops, the broader market remains resilient.

In the EU, the market remains stable with no price changes. However, with 30% of sugar volumes still uncovered, some buying activity may return in the coming weeks. If global trends continue downward, EU prices could remain unchanged or even face downward pressure.

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