Sugar Prices Surge as Indian Production Declines – Supply Concerns Drive Market Rally
"Sugar Prices Surge as Indian Production Declines – Supply Concerns Drive Market Rally"
Closing Prices on February 4, 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:Market Analysis: Indian Supply Concerns Trigger Price Rally
The recent surge in sugar prices is directly linked to news from India, the world’s second-largest sugar producer.- Sharp Decline in Indian Sugar Production:
- India’s sugar production for the 2024-25 season is expected to decline by 17%, dropping to 26.52 million tonnes, according to the All-India Sugar Trade Association (AISTA).
- This is a sharp fall from 31.90 million tonnes in the previous season, primarily due to adverse weather conditions and disease outbreaks in key sugarcane-growing regions.
- Tightening Global Supply Outlook:
- India’s sugar closing stocks are forecast at just 4.50 million tonnes by September 30, 2025.
- If these estimates hold, India’s sugar stocks will drop below two months’ domestic demand, a situation not seen in years.
- October-November sugar demand in India is projected at 4.80-5.00 million tonnes, driven by festival consumption.
- Market Reaction – Strong Buying Interest:
- With India’s export potential severely impacted, traders anticipate a tighter global supply situation.
- The March 2025 contract surged by +2.41%, reaching €484.66/t, while May 2025 rose +1.62% to €470.67/t.
- The bullish momentum has extended across all contracts, with long-term positions also showing gains.
EU Sugar Market: Stability Despite Global Supply Concerns
- The EU sugar market remains unchanged, with prices stable between €0.50/kg and €0.54/kg FCA EU.
- Demand remains weak, as most major buyers have already secured their contracts.
- Market estimates suggest that around 30% of sugar volumes are still uncovered, but buyers are hesitant to enter the market at current levels.
- Despite the global price recovery, the European market has yet to react, with no immediate signs of upward pressure on prices.
Market Outlook: Will the Rally Continue?
📈 Short-Term:- The Indian sugar production shortfall has triggered bullish sentiment, and if supply concerns persist, further price increases are possible.
- Markets will closely watch India’s government response, as any export restrictions could push prices even higher.
- If the EU market remains stable, it could act as a buffer against global price volatility.
- However, India’s weakened production outlook could have ripple effects, especially if other key producers also face challenges.
- Buyers should closely monitor global developments, as supply risks are increasing.
- Producers should capitalize on the price surge, securing contracts while demand remains strong.
Conclusion
The sugar market has entered a strong bullish phase, with global prices surging due to India’s production shortfall. While the EU market remains stable, the long-term impact of India’s declining stocks could push prices higher in the coming months. Market participants should stay alert to further developments, as volatility is expected to continue.Click here to reach our trading platform CMBroker
