1. Weekly News

China

China’s Sugar Production Expected to Grow in MY 2024/25

China’s sugar production in the 2024/25 marketing year (MY) is expected to rise by 6.5% year-on-year (YoY) to 10.54 million metric tons (mmt). This growth is due to the expansion of sugar cane cultivation in Guangxi province, increased sugar beet plantings in Inner Mongolia, and improved yields in these areas. The rise in acreage is supported by recovering domestic sugar prices, lowering corn prices, and converting farmland previously used for eucalyptus trees to sugar production. Furthermore, China has raised the minimum purchase price of sugar cane and set domestic sugar prices, reflecting a positive outlook for the country’s sugar production in the upcoming season.

Brazil

Brazilian Sugar Shipments Dropped WoW in W33

Vessels waiting to load sugar at Brazilian ports decreased to 90 in W33, with a scheduled load of 3.997 mmt. This is down from 99 vessels and 4.509 mmt in the previous week. The Port of Santos is set to handle the majority of these shipments. Brazil's average daily revenue from sugar and molasses exports in Aug-24 fell to USD 60.523 million, marking a 23.2% YoY decrease compared to Aug-23. Additionally, the export volume declined by 14.9% YoY, while the average price dropped by 9.8% YoY.

Brazil's Sugar Exports Increased in Jul-24 Despite Lower Prices

In Jul-24, Brazil's sugar exports increased by 28.5% YoY to 3.78 mmt. The export value reached USD 1.73 billion compared to USD 1.49 billion in Jul-23. Despite the higher export volume, the average export price dropped to USD 457.2 per metric ton (mt) compared to USD 506.3/mt in Jul-23.

Ukraine

Ukraine’s Sugar Exports From Sep-23 to Jul-24

According to the Ministry of Agrarian Policy and Food, Ukraine exported 689 thousand mt of sugar from Sep-23 to Jul-24, with 31% exported to the European Union (EU). The exports peaked in Jul-24, with 77.8 thousand mt shipped, mainly to Turkey and Libya, which accounted for 13% of the total exports.

Ukraine's Sugar Prices Forecasted to Decline Due to Weak Export Demand

According to the First Ukrainian Agricultural Cooperative (PUSK), Ukraine's sugar prices are expected to drop due to declining export demand. The country's sugar exports dipped from 100 thousand mt in Jun-24 to 3 to 4 thousand mt in Aug-24, shifting the market's focus to domestic consumer demand. Experts predict this trend could increase the country's sugar reserves in the near future due to higher domestic production. Ukraine also faces significant challenges in securing new export markets, especially as the EU is expected to increase its sugar production in the 2024/25 season, potentially driving domestic prices even lower.

Philippines

The Philippines Approves 240 Thousand MT of Sugar Imports to Stabilize Prices

The Philippines' Sugar Regulatory Administration (SRA) approved importing 240 thousand mt of sugar for the 2024/25 season to stabilize retail prices and support local farmers. The government divided the importation into two phases, with 176.5 thousand allocated to eligible importers and 63.5 thousand used to replenish sugar exports to the United States (US). The imported sugar is expected to arrive by September 15, 2024, providing a two-month buffer stock to ensure sufficient supply amid potential disruptions caused by El Niño.

2. Weekly Pricing

Weekly Sugar Pricing Important Producers (USD/kg)

Yearly Change in Sugar Pricing Important Producers (W33 2023 to W33 2024)

Brazil

In W33, Brazil’s sugar price increased by 2.13% week-on-week (WoW) to USD 0.48 per kilogram (kg). However, the price declined by 9.43% YoY from USD 0.53/kg in W33 2023, with no month-on-month (MoM) changes. Despite Brazil’s sugar price getting short-term support from good export performance in Jul-24, the global sugar market is under downward pressure from the optimistic production forecasts for India due to favorable rainfalls. The market closely monitors weather conditions in Brazil and India, and sugar prices will continue fluctuating, driven by the dramatic global supply.

India

In W33, sugar prices in India remained stable at USD 0.49/kg, with no WoW or MoM changes. However, the YoY price increased 8.89% compared to USD 0.45/kg in W33 2023. India's decision to withdraw from the export market continues to support the global market prices. Despite the increased rainfall during the monsoon season in India, there are concerns about Brazil's drought conditions for the 2024/25 season, which will negatively influence production and lead to future price fluctuation.

United States

For the US sugar market, prices decreased by 2.5% WoW to USD 0.39/kg in W33 compared to USD 0.40/kg in W32 due to fluctuating futures prices. Global sugar futures contracts declined this week due to increased global supply expectations, primarily driven by a promising sugarcane harvest in India. The Indian Meteorological Department reported that the country had received 7% more rain than the historical average during the monsoon season, which is expected to boost sugarcane production.

Mexico

In Mexico, sugar prices remained unchanged WoW at USD 1.32/kg in W33. However, the MoM and YoY prices declined by 10.88% and 25.99%, respectively. This decline aligns with the global price trend attributed to global supply recovery. Mexico's sugar price is expected to remain stable due to the country's strategy to enhance plantation productivity and resilience by introducing new sugarcane varieties and replant vines in the 2024/25 season.

Pakistan

Pakistan’s sugar prices have remained stable since W30, at USD 0.51/kg. Due to the export ban, the country’s sugarcane farmers and sugar mills face significant financial challenges. The Pakistan Sugar Mills Association (PSMA) reports that sugar mills have surplus stocks of USD 756 million (PKR 210 billion). A spokesperson mentioned that the current sugar prices are lower than the cost of production, and the high prices of sugarcane, interest rates, taxes, wages, and imported chemicals have contributed to this situation. The PSMA warned that the upcoming crushing season, starting in Nov-24, will be financially unsustainable, especially for smaller players.

3. Actionable Recommendations

Stabilize Domestic Prices and Diversify Markets

Ukraine needs to focus on stabilizing domestic sugar prices amid declining export demand. Strengthening domestic supply chains to reduce reliance on exports could be a key strategy, particularly as the EU is expected to boost its sugar production, potentially decreasing Ukraine's market share. The country should also explore alternative international markets, particularly in Asia or Africa, to diversify its customer base.

Monitor Weather Conditions and Crop Yields in India

Global sugar prices declined due to favorable monsoon rainfall in India, but future fluctuations could arise due to varying weather conditions in Brazil. Indian sugar producers should closely monitor weather patterns and crop yields domestically and internationally. Implementing water management practices and investing in climate-resilient sugarcane varieties could help maintain stable production levels and mitigate risks associated with unpredictable weather.

Sources: Tridge, UkrAgroConsult, Portal Do Agronegócio, Agravery, Agrobusiness

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