The Beet Brief: World sugar prices struggle despite high oil

Index-linked beet price volatility

The index-linked beet price started April between £27-28/tonne, having briefly peaked above £29/tonne at the end of March. This reflected an upturn in No.11 prices, which had been driven upwards by speculative funds buying back their short positions on the back of the sharp rise in world oil prices.

However, by 27 April, the index-linked beet price had fallen back to a low £21-22/tonne. By the end of the month, it was back to £25/tonne, close to its launch price in November.

In previous editions of the Beet Brief, we have said that opportunities to lock in attractive prices on this year’s index-linked price were likely to be short-lived. This appears to have been the case.

While oil prices remain high and volatile, and other commodities that are influenced by the energy complex have been driven up, sugar prices have been unable to maintain the gains they achieved in March. As Diagram 1 below shows, nearby No.11 prices are now only slightly higher than they were when the Middle East conflict began at the end of February.

Source: Czapp. stlouisfed.org

Why have sugar prices not followed oil prices?

There have been several factors behind why sugar prices have not risen in line with oil prices.

1. In the March Beet Brief, we said that it would be difficult for firmer world prices to be sustained unless the Brazilian gasoline price was revised upwards. This has not happened; Petrobras the state-owned fuel distribution company in Brazil, has kept producer prices unchanged. This means that the domestic producer price of gasoline is around 60-70% lower than the cost of importing it. This keeps a lid on Brazilian ethanol prices, which are an important reference point for sugar.
2. Furthermore, Brazil’s 2026 cane harvest is now underway, which has started to put downward pressure on ethanol prices as domestic supply increases. Prospects for Brazil’s cane crop look good and corn-based ethanol production has increased again year-on-year. This means ethanol prices can be expected to continue to fall in the coming weeks.
3. Thirdly, the 2025/26 cane crops in parts of Asia have outperformed expectations. While India’s crop has fallen well short, Thailand, China and Pakistan have all been larger than expected.
4. Finally, the conflict in Iran has had a negative effect on raw sugar demand. The Middle East is a deficit sugar region, supplied principally by several large refineries that import raw sugar and refine it into white sugar, which is either sold domestically or exported to neighbouring countries. With the Strait of Hormuz closed, some of these refineries have had to find alternative routes to get their raw sugar in and/or white sugar out. The situation means that raw sugar demand from these refineries is weaker than expected and white sugar supply is getting tighter. This is adding support to the white premium (the difference between world white and raw sugar prices). However, the index-linked beet price is only influenced by the No.11 raw sugar price, not the price of white sugar.

Adding all of this together has meant that sugar producers took advantage of the short-term price rally rather than waiting for prices to go higher. This, combined with speculators rebuilding their short position once more, has pushed prices down from their recent peak.

Longer term, El Niño remains a point to watch

With Brazil’s crop ramping up, most expect sugar prices to remain under pressure in the next couple of months unless the conflict in the Middle East produces more unexpected surprises.

But beyond this, the possible emergence of an El Niño weather pattern is beginning to get the market’s attention. El Niño can result in wetter conditions during Brazil’s harvest, hampering cane quality and making it more difficult to produce sugar. It also tends to mean drier-than-normal weather in Asia, which would be negative for both 2026/27 production and the following year too. For the moment, this remains a point to watch but could become an important price driver later in the second half of the year.

EU/UK sugar prices continue to recover

We reported last month that EU/UK sugar prices had started to rise. This has continued over the past month. While stocks across the EU remain high, rising costs of production because of the situation in the Middle East mean that producers are less willing to sell at the very low prices that were previously prevailing. Spot prices in the UK are reported to be €550/tonne, ex-works having been below €500 in recent months (the trigger for the market linked bonus is €575).

However, quotes for 2026/27 sugar are reported to be in the region of €580/tonne, ex-works Northwest EU, which would imply a price in the UK above €600/tonne. This is above the trigger for the 2026/27 market linked bonus, which is €535/tonne. However, it remains early days for these sales; the 2026/27 sugar pricing round begins now and not much sugar is thought to have been sold yet.

On 30 April, the European Commission has announced the suspension of the IPP (Inward Processing Procedure) for raw sugar. This will help reduce the amount of duty-free sugar that can enter the EU market and offer some support to prices. We will examine this further in next month’s Beet Brief.

While EU stocks are high, sugar buyers are well aware that a further drop in beet area of 7-8% that is expected in in 2026/27 will eat into future supply. In this context, the yield prospects for the coming crop will be important, with high levels of aphids set to pose a much greater challenge than last year.

UK crop outlook

Looking at the UK situation in more detail, there is growing concern about the crop. Area is expected to fall by 10-12% in the coming year. Conditions for planting have been generally good, but the average plant date is expected to be slightly later than normal because of the wet conditions over the winter.

At the same time, the Virus Yellows pressure is forecast to be high this year, with the recent lack of rainfall supporting the aphid migration and slowing plant growth.

If we compare the current situation to 2025/26:

(a) the projected first aphid flight was 22 April, 20 days earlier than last year (the actual aphid flight date was actually six days earlier than this), and

(b) the average plant date is likely to be 10-12 days later.

When combined, the gap between planting and aphid flight is more than one month less than last year and means that beet will be germinating into an environment with a lot more aphids this year. 

To compare the situation with previous years, the diagram below compares the number of days between the average plant date and the projected first aphid flight in years without neonicotinoid seed protection. While the average plant date for this year is only an estimate, it still shows that it is likely to be the shortest gap between planting and aphid flight since 2020/21, the year when the UK crop was badly hit by Virus Yellows and yields fell by 25-30%.

In light of this, NFU Sugar, the BBRO and British Sugar are jointly applying for emergency authorisation for an additional application of InSyst from the Health and Safety Executive.

A trader’s view

NFU Sugar Board appointee and sugar trader Paul Harper shares his thoughts on the current market situation.