1. Weekly News

Global

Sugar Prices Expected to Rise 10% in Q4 2024 Due to Brazil’s Poor Yields and Global Supply Chain Constraints

Experts forecast a 10% rise in sugar prices for Q4 2024, driven by poor yields in Brazil due to earlier droughts followed by heavy rains, which may also affect next year's planting. Supply chain issues, including limited container availability, have constrained sugar exports from Ukraine and Thailand, adding to price pressures.

White sugar prices on the London commodity exchange reflect this trend, with Dec-24 delivery prices up by nearly USD 32.20 (EUR 30) over two months to around USD 568.94 per metric ton (mt) (EUR 530/mt). Despite stable production in parts of the EU, the International Sugar Organisation (ISO) projects a global sugar deficit of 3.6 million metric tons (mmt) for 2024/25, with production at 179.3 mmt versus consumption at 182.9 mmt.

Argentina

Argentina's 2024 Sugarcane Harvest Boosts Bioethanol Production and Sugar Exports

Argentina's 2024 sugarcane harvest concluded positively, with milling in Tucumán reaching 17 mmt, up from 15.4 mmt last year, though slightly below the 19.5 mmt projection. Bioethanol production, a major sugar byproduct, is expected to rise by 30% to 600 thousand cubic meters (m3), enhancing the national energy mix and reducing reliance on fossil fuel imports. Exports have surged, with 300 thousand mt of sugar shipped as of W44 and an anticipated total of 560 thousand mt, driven by strong global demand.

Kenya

Kenya's Sugar Act 2022 Establishes Levy to Support Sector Development and Enhance Productivity

Kenya's newly assented Sugar Act 2022 introduces a Sugar Development Levy to support the sugarcane sector. The Levy, set at 4% of the value of domestic and imported sugar, will be allocated for infrastructure development, research, and productivity enhancement in sugar-producing regions. Specifically, 15% of the Levy will fund factory development, 15% will go to research by the Kenya Sugar Research and Training Institute (SRI), and 40% will support cane development. The Kenya Sugar Board, re-established under the Act, will oversee industry regulation, policy implementation, and market surveillance. The law addresses challenges in Kenya's sugar industry, such as rising production costs, land reduction, and poor management, aiming to improve local and international market dynamics.

Ukraine

Vinnytsia Region's Sugar Production Drops 8.4% YoY as Harvesting Continues with Lower Yields

As of November 1, 2024, sugar refineries in the Vinnytsia region of Ukraine have produced 164 thousand mt of sugar, a decrease from 179 thousand mt during the same period in 2023. The region’s five sugar plants have processed approximately 1.26 mmt of raw materials. The harvesting of sugar beets is ongoing, with 77% of the crop fields harvested as of W44. However, the average yield has dropped to 421.6 quintals per hectare (ha), down from 476.8 quintals/ha last year. By October 25, 2024, Ukrainian farmers had harvested 8.3 mmt of sugar beets from 66% of the crop fields.

2. Weekly Pricing

Weekly Sugar Pricing Important Producers (USD/kg)

Yearly Change in Sugar Pricing Important Producers (W44 2023 to W44 2024)

Brazil

In W44, Brazil's sugar price increased to USD 0.56 per kilogram (kg), marking a 1.82% week-on-week (WoW) rise from USD 0.55/kg the previous week due to rain-induced disruptions in sugarcane milling in the Center-South region. This weather event has slowed processing, prompting price increases despite subdued demand. Furthermore, experts report that a promising harvest is forecasted for 2025.

India

India's sugar prices remained steady at USD 0.50/kg in W44, marking a 6.38% increase compared to the previous year. However, the Indian Sugar and Bio-Energy Manufacturers Association (ISMA) has called for policy changes to support the industry. They have recommended increasing the Minimum Sale Price (MSP) of sugar to USD 0.46 (INR 39.14/kg) for the 2024/25 season, up from USD 0.37/kg (INR 31/kg) fixed in 2019, and raising ethanol procurement prices. The association also advocates for the export of 2 mmt of sugar, citing excess stock of 3.12 mmt to 3.22 mmt. Current ex-mill sugar prices of USD 0.43/kg (INR 36.5/kg) are below the production cost of USD 0.49/kg (INR 41.66/kg), leading to financial strain for producers. ISMA stresses that the sugar sector needs urgent government intervention to ensure industry stability, given rising production costs and stagnant ethanol prices. They propose a consistent ethanol pricing formula and a long-term export policy to manage the expected sugar surplus. With a projected surplus stock of around 3.2 mmt, the association anticipates sugar production to match last year's output, totaling 33.30 mmt.

United States

The United States (US) sugar prices decreased to USD 0.48/kg in W44, reflecting a 2.04% WoW decline and a 20% YoY drop from USD 1.84/kg in 2023. The price decline coincides with a growing concern over domestic sugar shortages, as the US is facing a significant deficit in sugar supplies. The National Confectioners Association (NCA) has highlighted a gap between demand (12.5 mmt) and domestic supply (9 mmt), exacerbated by tight import restrictions and tariffs. In addition, the Alliance for Fair Sugar Policy is advocating for legislative changes under the upcoming Farm Bill, which would address sugar production limits and promote greater domestic supply. They are hopeful for a bipartisan agreement that would increase domestic sugar production and ease trade barriers, which have placed pressure on US manufacturers. With the presidential election approaching, the outcome may influence future policy decisions, especially regarding trade tariffs and sugar imports. The industry is pressing for timely reforms, urging action in the post-election session before the new administration takes office in Jan-25.

Mexico

Mexico’s sugar prices dropped to USD 1.17/kg in W44, a 0.85% WoW decrease, and a 36.41% YoY decline, reflecting significant downward pressure due to surplus inventories. With sugar becoming 15.1% cheaper in early Oct-24, this price fall marks the first 15% reduction in nearly 11 years. Key drivers include high import volumes, with 720 thousand mt of sugar flooding the domestic market following speculative price peaks in the 2023/24 cycle. Imports and reduced exports to the US have kept inventories elevated. The Agricultural Markets Consulting Group (GCMA) anticipates further price decreases if domestic producers cannot manage the growing surplus as the harvest season begins.

3. Actionable Recommendations

Diversify Global Sourcing to Offset Price Volatility

To mitigate the anticipated sugar price increase in Q4 2024, stakeholders should consider diversifying sourcing options beyond Brazil and other weather-affected regions. Stakeholders can reduce dependency on high-risk regions and better manage price fluctuations by engaging suppliers in countries with stable or surplus production, such as Argentina. Strengthening partnerships with regions like Argentina, which has seen a 30% increase in bioethanol production and sugar exports, can provide more reliable supply channels and help offset shortages due to disruptions in Brazil, Ukraine, and Thailand.

Invest in Local Production and Infrastructure

Sugar-importing regions should consider investing in local production and infrastructure improvements to alleviate import dependence and enhance supply stability. For instance, Kenya’s new Sugar Act, which allocates funds for factory development and research, provides a model for regions seeking to increase domestic capacity. Investing in local facilities and productivity-enhancing initiatives can lower reliance on volatile global markets, support local economies, and provide a buffer against future global supply disruptions.

Sources: Tridge, Noticias Agropecuarias, Informador, Nieuweoogst, the Hindu, Ukrinform