The Beet Brief: Why falling world prices have not weakened the UK sugar market

Highlights:

• No.11 raw sugar approached 20c/lb in October before falling sharply after Brazil’s presidential election weakened the Brazilian real. 

• A weaker real increases the local-currency value of dollar export earnings, allowing Brazilian mills to sell sugar more competitively in US dollars. 

• The global price fall has not removed Europe’s physical supply problem.

• Spot indications stand at €600/t ex-works Northwest Europe and €670/t delivered UK, reflecting the cost of replacing a much smaller regional crop. 

Raw sugar moved above 20c/lb during October, supported by wet weather in Brazil and weaker crop prospects in India. That rally was abruptly interrupted after Brazil’s presidential run-off on 25 October.

The more fiscally conservative Flavio Bolsonaro had won the first round of voting earlier in October, but Luiz Inácio Lula da Silva was unexpectedly re-elected in the run-off vote. This triggered a sharp sell-off in Brazilian assets, with the real initially falling by around 10% against the US dollar. No.11 raw sugar fell by roughly 5-6% in the first trading session after the result, and has fallen further in early November. By 6 November, the nearby price was around 18.4c/lb.

Why the Brazilian real matters to sugar

No.11 is quoted in US dollars, but Brazilian mills pay many of their costs in reals. When the real weakens, each dollar earned from exporting sugar converts into more local currency. A mill can therefore accept a lower dollar sugar price while protecting, or sometimes improving, its return in reals. That encourages Brazilian producers to sell or hedge more sugar and can quickly put pressure on the world benchmark.

The election changed the short-term market story even though it did not add a single tonne of sugar to global supply. Heavy rain has still disrupted harvesting and milling in Centre-South Brazil, while India’s weaker monsoon has reduced yield expectations. The currency effect explains why No.11 can fall even while the physical crop outlook remains supportive.

The currency-led fall in No.11 does not remove Europe’s physical supply problem. Across the EU and UK, early campaign results have largely confirmed the damage caused by the summer drought. Area was already around 10% lower than last year, and disappointing yields have compounded that reduction.

France and Germany account for much of the loss. France’s beet crop is now forecast at around 30% below last year, with some fields unlikely to be harvested. Poland has performed better, with yields near the five-year average and relatively good sugar content, but this is not enough to offset losses further west.

In the UK, yields are particularly variable depending on soil type after the drought, while sugar content has generally held up better than feared. The current estimate for UK sugar production is below 750,000 tonnes, which we believe is significantly below the volume British Sugar needs to supply their customers. It is not clear where the additional tonnes will come from – whether from any existing stocks or from additional imports. Cantley is expected to begin its final campaign on 09 November.

The market entered 2026/27 with substantial stocks, but the production loss is too large to be covered by stocks alone. Current estimates imply imports of about 2.6-2.7 million tonnes, while exports fall to a minimum and stocks are drawn down sharply.

This matters because some of the additional sugar may need to enter under the CXL quota, which carries an import duty. At current world prices, the estimated CXL import parity is around €700/t on an ex-works beet-belt equivalent basis. Import parity is not a guaranteed market price, but it is a useful indication of the level needed to attract the marginal tonne into Europe once freight, refining and duty are included.

Spot pricing has strengthened accordingly. Current reports put white sugar at €600/t ex-works Northwest Europe and €670/t delivered UK. The difference reflects the cost of moving sugar into a structurally deficit UK market, as well as differences in delivery terms. Most industrial buyers of sugar have already signed contracts for the volumes they require, which means these spot numbers apply to a relatively small part of the market, but the direction is clear: replacing the lost crop is becoming more expensive.

November’s market is a reminder that the world benchmark is only one part of the price picture. Currency movements in Brazil can pull No.11 lower by encouraging producer selling, while a shortage of physical sugar in Europe pushes regional replacement costs higher. The two markets can therefore move in different directions, at least for a time.

For UK growers, the clearest local signal remains the cost of bringing replacement sugar into a structurally deficit market. The UK spot price has continued to rise even as the No.11 has retreated from its October high. Whether that strength lasts will depend on how much duty-paying sugar Europe ultimately needs, how far stocks are drawn down and whether the weaker real continues to weigh on the world market. 

Attention will also turn to 2027 planting. Lower beet prices and high growing costs may limit any rebound in area across Europe. Current early estimates suggest only a 1-2% recovery in EU+UK area. Even with more normal yields, that could leave the market needing duty paying imports again in 2027/28. 

Courtesy of Paul Harper, NFU Sugar board appointee and sugar trader.

Courtesy of Lydia Ballamy, NFU Sugar Policy Adviser.