1. Weekly News

Australia

Wilmar Sugar Halts Inkerman Mill Operations Amid Pay Dispute

Wilmar Sugar and Renewables, Australia's largest sugar producer, has temporarily halted operations at its Inkerman Mill in the Burdekin region due to a pay dispute with unions. The mill is the only one of Wilmar's eight mills currently operating, with the others slated to start by next week. The dispute, which has delayed the crushing season, poses a significant and potentially detrimental threat to Australian sugar production and exports. Unions are demanding an 18% pay increase over three years, rejecting the company's offer of 14.25% over 3.5 years and a USD 1,500 sign-on bonus. Despite the looming threat of further industrial action, Wilmar aims to resume operations soon.

Brazil

Sugar Market Faces Decline Amid Brazilian Production Increase

The sugarmarket experienced a downturn in its main contracts on the New York and London stock exchanges, with raw sugar falling by 0.76% and white sugar dropping by 0.93%. Sugar production in the second half of May-24 decreased by 3.36% YoY. Despite this, the accumulated crushing volume since the start of the 2023/2024 harvest saw an increase of 11.15% YoY as of June 1, 2024. In the domestic market, prices saw minor decreases, with the CEPEA/ESALQ Indicator dropping 1.61%, while sugar prices in the North and Northeast regions remained stable. Meanwhile, very high polarity (VHP) sugar in Santos experienced a slight increase in free on board (FOB) price.

Decline in Sugar Shipments at Brazilian Ports Reflects Challenging Export Scenario

The number of ships waiting to load sugar at Brazilianports has decreased from 93 in W23 to 89 in W24, and the volume of sugar scheduled for loading has also fallen, according to a maritime agency, Williams Brasil. The average daily revenue from Brazilian sugar and molasses exports reached USD 56.73 million in Jun-24, a 16.6% YoY drop compared to Jun-23. This decline was due to decreases in both volume and average price. This data reflects a challenging scenario for Brazil's sugar exports, underscoring the need for strategic adjustments in the sector.

Kazakhstan

Kazakhstan Imposes Temporary Ban on Sugar Exports Until August 31, 2024

Kazakhstan's Minister of Agriculture has announced an immediate temporary ban on sugar exports, effective until August 31, 2024. This measure, aimed at curbing re-export activities, ensures that the domestic market remains adequately supplied amidst summer demand surges. The ban does not apply to the international transit of sugar through Kazakhstan or its movement between Eurasian Economic Union (EAEU) member states via Kazakhstan. The Ministry of Agriculture has affirmed that the country has sufficient sugar reserves and permits duty-free raw sugar imports for industrial use to maintain supply stability.

Ukraine

Ukraine Expands Sugar Exports to Over 30 Countries, Eyes Additional Quotas

Ukraine has significantly increased its sugar exports during the 2023/24 season, delivering to more than 30 countries, excluding the European Union (EU) nations. In particular, the country has notably expanded its exports to Cameroon by 20% year-on-year (YoY), making it the leading importer of Ukrainian sugar. Strong demand was also observed in countries such as Lebanon, Libya, Israel, and Turkey, with shipments to Sri Lanka and China indicating the product's global reach. It is estimated that Ukraine has the potential to export an additional 100 thousand metric tons (mt) in the summer, contingent upon discussions with the Ministry of Agrarian Policy regarding an increase in the export quota.

2. Weekly Pricing

Weekly Sugar Pricing Important Producers (USD/kg)

Yearly Change in Sugar Pricing Important Producers (W24 2023 to W24 2024)

Brazil

Brazil's sugar prices remained unchanged at USD 0.51 per kilogram (kg) in W24. However, based on monthly and yearly comparisons, the prices decreased by 3.37% and 16.37%, respectively. Brazil's sugar production has recovered in the 2023/24 season, with the total amount crushed increasing by 11.15% YoY as of June 1, 2024. Consequently, a declining trend was observed in both export volume and value.

Mexico

Mexico's sugar prices declined by 1% week-on-week (WoW) at USD 1.65/kg in W24. Sugar prices in Mexico fell by 5.17% MoM, marking the fourth consecutive month of declines. This drop brought prices to their lowest level since Jan-23. The drop is attributed to the new harvesting season in Brazil, where favorable weather conditions have improved the supply outlook. Additionally, global sugar production is forecasted to increase to 186 million metric tons (mmt) in the 2024/25 season, up from 178.8 mmt in the previous season.

United States

In W24, sugar weekly pricing for the United States (US) stood at USD 0.42/kg. This represents only a 2.44% increase WoW and a 5% increase MoM. Over the past 4 weeks, sugar pricing for the US has been relatively stable with a variation of only USD 0.02/kg. On the other hand, in W24 pricing showed a significant 20.75% YoY drop. This drop is attributed to higher supply during this season than last season. Over the past month, supply has remained stable despite weather challenges.

Pakistan

Pakistan's sugar prices remained stable at USD 0.49/kg, with no changes in WoW or MoM, but experienced a 22.5% YoY increase from USD 0.40/kg in W24 2023. Pakistan is experiencing a supply surplus in the 2023/24 season, leading industrial participants to request a resumption of sugar exports. However, the government has yet to make a final decision due to concerns about local supply stability.

3.Actionable Recommendations

Monitor and Adapt to Global Market Trends

Continuous monitoring of global market trends, including consumer preferences and regulatory changes, is essential. For example, Kazakhstan's temporary ban on sugar exports indicates the need to adapt quickly to regulatory shifts. Implementing robust market intelligence systems and maintaining flexible operational strategies will allow companies to respond effectively to such changes.

Strengthen Resilience Against Market Volatility

With fluctuations in sugar prices and production volumes, as seen in Brazil and Mexico, the industry must develop resilience strategies. This includes using futures contracts to hedge against price volatility and diversifying product lines to include high-value derivatives like biofuels and specialty sugars. Establishing emergency funds or financial reserves can also buffer against market downturns.

Invest in Sustainable and Efficient Production Practices

Sugar producers should invest in modern, efficient agricultural practices to address the decline in production observed in Brazil and ensure long-term sustainability. This includes adopting precision agriculture technologies, which optimize resource use and increase yield, and implementing sustainable farming practices to minimize environmental impact.

Sources: AgroPortal, Tridge, NoticiasAgricolas, Agrosektor, Portal Do Agronegocio, Hellenic Shipping News