1. Weekly News

Global

Sugar Prices Rise Amid Global Supply Concerns

On June 28, 2024, sugar futures prices increased due to concerns about global supply. In London, white sugar prices rose by 2.27% to USD 574.30 per metric ton (mt), while in New York, raw sugar prices increased by 0.45% to USD 0.203 per pound (lb). The spread of the red rot fungal disease in Uttar Pradesh negatively impacted sugar beet production in India. Despite these global supply issues, Brazil's Center-South region experienced a significant 20.48% year-on-year (YoY) increase in sugarcane crushing in the first half of Jun-24. Meanwhile, the Brazilian domestic market saw slight price drops on June 28, 2024.

Brazil

Declining Sugarcane Harvest in Brazil's Center-South Region

According to the Sugarcane Technology Center (CTC), the 2024/25 sugarcane harvest in Brazil's Center-South region experienced a 3.5% YoY drop by the end of May-24, with an average yield of 89.4 mt per hectare (ha). This decline is primarily due to a water deficit, particularly affecting Paraná, Mato Grosso, Mato Grosso do Sul, and Northwest São Paulo. However, regions like Minas Gerais, Ribeirão Preto, and Piracicaba have managed to maintain higher productivity levels.

Indonesia

PTPN President Urges Indonesian Government to Restrict Sugar Imports to Support Local Farmers

The President of state-owned enterprise PT Perkebunan Nusantara (PTPN) has urged the Indonesian government to restrict sugar imports to support the sustainability of domestic sugarcane farmers. He emphasized that imported sugar could significantly affect the livelihoods of local farmers. Furthermore, he said if the local farmers' productivity could reach 8 mt per year, local sugar prices could be reduced, benefiting farmers and consumers.

European Union

EU Confirms No Protective Duties on New Ukrainian Sugar

The deputy prime minister for European Integration announced that the European Union (EU) has confirmed it will not impose protective duties on Ukrainian sugar and eggs. Contrary to the Financial Times, the minister emphasized that the EU has no intention of reintroducing duties on Ukrainian sugar and eggs.

Weather Variability Impacts Sugar Beet Outlook in Western Europe

Excessive moisture in Western Europe has delayed sugar beet sowing and raised concerns about yields for the upcoming season. However, drier weather has reduced pest levels in Denmark and Sweden. The EU is expected to see a 5% YoY increase in sugar beet acreage, mainly in Germany (+6.5%) and France (+4.6%). This could result in higher sugar production for the 2024/25 season. However, these predictions are still tentative and heavily depend on future weather conditions.

Philippines

Philippines Plans to Import 200 Thousand MT of Refined Sugar to Address Supply Gap

The Philippines plans to import around 200 thousand mt of refined sugar in late 2024 to address the supply gap and ensure price stability. This plan was officially signed on March 8, 2024, under Sugar Order No. 2. The importation will be triggered if current sugar stocks decrease by Aug-24 or Sep-24. The Department of Agriculture and the Sugar Regulatory Administration (SAR) will meet in Jul-24 to finalize the plan. The United Sugar Producers Federation (UNIFED) expressed support for this plan, citing delayed harvest due to El Niño.

Weekly Pricing

Weekly Sugar Pricing Important Producers (USD/kg)

Yearly Change in Sugar Pricing Important Producers (W26 2023 to W26 2024)

Brazil

Brazil's sugar prices decreased 2% week-on-week (WoW) to USD 0.49 per kilogram (kg) in W26. Despite this decrease, global sugar prices increased this week due to concerns about fungal disease in India. In addition, Brazil's sugarcane harvest in the Center-South region experienced a 3.5% YoY drop by the end of May-24, with an average yield of 89.4/ha due to a water deficit.

India

The sugar price in India remained unchanged at USD 0.49/kg in W26. However, India's agricultural agency reported that the spread of a fungal crop disease called red rot in Uttar Pradesh has negatively affected the country’s sugarcane production outlook. This has raised concerns about global supply, leading to increased sugar futures this week.

Unite States

In the United States (US) sugar prices decreased by 2.22% WoW to USD 0.44/kg in W26. The decline reflects uncertainties surrounding sugarcane yields in the late 2023/24 season. Persistent drought in Brazil's primary producing region continues to influence market projections. Below-normal monsoon rains in India and dry conditions in Brazil further impact market dynamics. Despite current challenges, medium-term sugar price sentiment remains optimistic.

Mexico

Mexico's sugar prices declined by 1.32% WoW to USD 1.49/kg in W26. Based on a monthly comparison, the price fell by 10.78% month-on-month (MoM), marking the fifth consecutive month of declines. Mexico's sugar production in the 2023/24 season is forecasted to drop slightly to 4.57 mmt compared to 4.74 mmt in the 2022/23 season. In addition, the American Sugar Coalition urges the government to decrease sugar imports from Mexico due to concerns about surpassing export limits and potential trade regulation violations.

Pakistan

Pakistan’s sugar price stood at USD 0.49/kg in W26, decreased by 2% WoW. Based on a monthly comparison, the price remained unchanged. However, based on a yearly comparison, the price surged by 13.95%. Despite a supply surplus in the 2023/24 season, the Pakistani government is still deciding whether to resume sugar exports due to concerns about domestic supply and the potential price hike.

3.Actionable Recommendations

Promoting Sustainable Water Management Practices in Brazil

The Brazilian government should prioritize and promote sustainable water management practices in sugarcane cultivation areas affected by water deficits. This can be achieved through initiatives to encourage the adoption of efficient irrigation technologies, promote water conservation practices, and implement policies that support sustainable water use in agriculture. By focusing on sustainable water management, Brazil can mitigate the adverse effects of water shortages on sugarcane yields and enhance the resilience of the sugarcane industry in water-stressed regions.

Strengthening Disease Surveillance and Control Measures in India

Indian agricultural agencies should strengthen surveillance and control measures to contain the spread of red rot and other fungal diseases affecting sugarcane crops. By implementing robust disease monitoring systems, early detection, and effective control measures, India can safeguard its sugarcane production and minimize the risk of crop diseases impacting global supply. Additionally, enhancing research efforts to develop disease-resistant sugarcane varieties can further bolster India's resilience against crop diseases and contribute to sustainable sugar production.

Sources: Broadcast, Kontan, NoticiasAgricolas, Gmanetwork, UkrAgroConsult