1. Weekly News

Global

Global Sugar Supply Faces Six-Year Low Due to Brazilian Drought, Market Prices Adjust with Delayed Harvest

Global sugar supplies are projected to reach a six-year low in early 2025 due to severe drought impacting Brazilian sugarcane production. The drought has weakened crop conditions, delaying next year's harvest to late Apr-24 and lowering current-season cane processing. Brazil's pivotal role in the global sugar market is highlighted by estimates that it will produce nearly 75% of the global raw sugar in 2024. While reduced demand and an increase in China's sugar crop may partially offset the impact, supply constraints have led to a premium on Mar-25 deliveries. Meanwhile, recent rainfall in Brazil eased speculation-driven demand, causing London's Dec-24 white sugar futures to drop by 3.9% to USD 563 per metric ton (mt).

Brazil

Brazil’s Center-South Mills Boost October Sugarcane Processing by 2.75% YoY, with Increased Mill Closures

In the first half of Oct-24 for the 2024/25 season, mills in Brazil's Center-South region processed 33.832 million metric tons (mmt) of sugarcane, a 2.75% increase over the 32.928 mmt processed in the same period last year, according to the Sugarcane and Bioenergy Industry Union (Unica). As of W43, 255 units are operational, including 236 for sugarcane processing, nine for corn-based ethanol, and ten flex plants. Notably, twelve mills have already completed milling for the season, up from four at this point last year.

Poland

Poland's Sugar Beet Harvest Shows Promising Yields Despite Regional Drought Variability

The sugar beet harvesting campaign in Poland began in mid-Aug-24 and is progressing well, with many farmers reporting yields exceeding 100 mt/ha. Early sowing in Mar-24 contributed to uniform emergence and good plant density. However, some areas experienced severe drought, leading to yield variability. While regions such as Lower Silesia and Opole are achieving frequent yields of 90 to 110 mt/ha, other areas report lower yields of 50 to 60 mt/ha. The Polish Association of Sugar Beet Growers projects an average yield of 68 mt/ha, a 6% year-on-year (YoY) increase from last year, resulting in an estimated total production of 19 mmt of roots and a record sugar output of approximately 2.6 mmt.

Türkiye

Successful Start to Sugar Beet Harvest in Türkiye's Afşin District

The sugar beet harvest has commenced in Türkiye's Afşin district of Kahramanmaraş, yielding positive results for local producers. Farmers have reported a productive season, attributing their success to timely irrigation and fertilization practices. Producers highlighted the efficiency of modern farming techniques, noting that tasks previously requiring significant manual labor can now be completed swiftly with machinery. The harvested sugar beets are being transported to nearby sugar factories, marking a successful start to the harvesting season.

Bayburt Farmers Anticipate a Record Sugar Beet Yield with Improved Irrigation

Farmers in Bayburt's Demirözü district have commenced harvesting sugar beets from 50,000 acres of land, anticipating a yield exceeding 250,000 mt. This high yield is due to the implementation of irrigated agriculture following the construction of a dam in 2018, which improved farming conditions. Bayburt's Governor visited the region to observe the harvest and expressed optimism about the production potential, emphasizing that favorable climate conditions have contributed to the successful crop.

Ukraine

Vinnytsia Region Sugar Output Reaches 140,000 MT Amid Lower Yields, 2024/25 Harvest Ongoing

As of October 25, sugar factories in Ukraine's Vinnytsia region have produced 140,000 tmt of sugar, down from 152,000 mt at the same time last year. The region's five factories have processed nearly 1.14 mmt of sugar beets. Harvesting is ongoing, with 67% of the sown areas completed. However, average yields are lower than last year, at 420.9 mt per hectare (ha) compared to 476.8 mt/ha. Up to 30 sugar factories are expected to operate in Ukraine for the 2024/25 marketing year.

2. Weekly Pricing

Weekly Sugar Pricing Important Producers (USD/kg)

Yearly Change in Sugar Pricing Important Producers (W43 2023 to W43 2024)

Brazil

In W43, Brazil's sugar prices rose to USD 0.55/kg, a 1.85% weekly increase, reflecting a 12.70% YoY decline from USD 0.63/kg. Recent trading on international exchanges, notably Intercontinental Exchange Inc (ICE) Futures, showed a downturn in sugar futures due to concerns about reduced stocks and potential harvest damage from late rains in Brazil's Center-South region.

India

As of W43, India's sugar prices remained steady at USD 0.50/kg, reflecting a 6.38% YoY increase from USD 0.47/kg. The Indian Government has deferred a proposal to raise sugar's minimum selling price (MSP), which has not been revised since its last increase from USD 0.37/kg (INR 31/kg) in 2019. The MSP was introduced in Jun-18 to ensure that sugar mills cover the minimum production costs and pay cane dues to farmers. The Commission for Agricultural Costs and Prices (CACP) highlighted a shrinking difference between retail and wholesale prices, which have been above the MSP in recent seasons. As of September 2023, wholesale sugar prices were around USD 47.87 per quintal (INR 4,025/q), while retail prices reached USD 51.65/q ( INR 4,343/q). Furthermore, the CACP proposed a dual pricing system to balance affordability for household consumers with higher prices for industrial buyers, suggesting this approach could address the gap between rising production costs and current sugar prices.

United States

United States (US) sugar prices stood at USD 0.49/kg in W43, representing a 2.08% increase week-on-week (WoW) but a significant 19.67% decrease YoY. The Louisiana sugarcane crop has benefitted from favorable growing conditions this year despite damage from Hurricane Francine. The United States Department of Agriculture (USDA) estimates that around 2 mmt of sugar will be produced, supported by an increase in acreage to over 536,000 acres. Although the Northern regions faced dryness during the summer, overall rainfall has improved compared to the previous year's extreme drought. Furthermore, the sugarcane harvest commenced on September 16 and is expected to conclude by mid-Jan-25. The total value of the sugarcane crop is estimated at around USD 1.5 billion at both the farm and processing levels. The American Sugar Cane League emphasized that Louisiana remains a vital sugar-producing region in the US, particularly in parishes near Baton Rouge, such as Pointe Coupee and Ascension. As the harvest progresses, producers remain optimistic about achieving a strong production season despite the impacts of the hurricane.

Mexico

In W43, Mexico's sugar prices rose to USD 1.18/kg, reflecting a 2.08% WoW increase. However, this price is still 31.40% lower YoY, down from USD 1.72/kg the previous year. The recent demand for sugar is attributed to the Día de Muertos festivities, prompting local initiatives to distribute sugar and cocoa for families to prepare traditional chocolate bars and offerings for altars during the Xantolo celebrations. The Undersecretary of Political Development announced the distribution of 85 mt of sugar to vulnerable populations across 16 municipalities, highlighting the impact of adverse weather conditions on sugar supply this year. Despite the seasonal demand increase, the overall price remains substantially lower than last year, reflecting broader market trends.

3. Actionable Recommendations

Diversify Sugar Sourcing and Procurement Strategies

Given the projected decline in global sugar supplies due to the drought in Brazil, stakeholders should adopt a diversified sourcing strategy to mitigate risks associated with supply constraints. This includes establishing relationships with sugar producers in regions less affected by adverse weather, such as India and Poland, where yields have shown positive trends. Companies can enhance resilience against potential supply disruptions by reducing dependence on Brazilian sugar and securing a more stable pricing structure through long-term contracts with various suppliers. Additionally, exploring alternative sweeteners, such as high-fructose corn syrup or stevia, can further diversify product offerings and hedge against rising sugar prices.

Invest in Sustainable Agricultural Practices

Investment in sustainable farming practices is essential to enhance sugarcane and sugar beet productivity amidst climate challenges. Stakeholders should collaborate with farmers to implement modern agricultural techniques, such as precision farming and efficient irrigation systems, which have already shown positive results in Türkiye and Poland. Supporting research and development in crop resilience can help adapt to changing climate conditions. Additionally, governmental support through subsidies and training programs can promote sustainable practices, ultimately leading to improved yields and more reliable supply chains in the sugar sector.

Sources: Tridge, IHA, SonDakikda, Canal Rural, Agro Times, Grain Trade, Agro Digital, Brproud, El Sol de Hidalgo.