After falling below 16 cents/lb in mid-July, October 2025 futures have recovered back to the 16-17 cents/lb range but has struggled to move beyond this. At the lower end of this range, prices have looked cheap to buyers because some Brazilian millers are expected to favour ethanol over sugar. But at the upper end, prices have failed to find support, with the weather outside of Europe remaining favourable for most sugar producers.
This was demonstrated by an event in mid-July; President Trump announced Coca-Cola would switch to using sugar rather than corn syrup in the US, thereby boosting demand. In response, prices made a run at 17 cents/lb, only for producer selling and profit-taking to push prices down again.
Latest world market developments
As we have discussed before, there are three big players that influence the world market: Brazil, India and Thailand.
Developments in these countries over the last month have been mixed:
- Centre/South Brazil is the middle of its 2025 harvest, which is running behind last year. Moreover, while the amount of cane being used to produce sugar is high, the amount of sugar in the cane is low. Up to the end of June, sugar production was around two million tonnes lower than last year. Production estimates are being marked down, with some mills in inland locations switching from sugar to ethanol; the consensus now is for sugar production to be in the 39-40 million tonnes range, which is lower than last year.
- Despite good rainfall, the prospects for Thailand’s crop are also being marked down on the back of lower-than-expected area. Thailand is also expected to focus on the production of white sugar rather than raw.
- But at the same time, the Indian monsoon remains ahead of normal. Cane area is also thought to have increased, which is supportive for production in 2025/26.
The reduction to estimates in Brazil, along with the news from Thailand, is tightening the trade balance out to Q1 next year. Some analysts (although not all) now have clear deficits for raw sugar towards the end of this period.
The big question is the extent to which a larger crop in India can bridge this gap. At current domestic price levels, Indian exports are only viable around 19 cents/lb but a large crop is likely to mean that prices will fall from current levels next crop year.
So, while recent developments have been moderately supportive, they have not been sufficient to encourage the speculative funds to buy back their short positions. These funds remain 128,000 lots net short. This suggests there is still potential for a rally if this position was to turn around.
Further downgrades to production in Brazil could be a trigger for this. However, it is worth noting that a rally based on lower Brazilian sugar production took place last year, but not until mid-September. For growers with beet on the futures-linked contract, there is now only a short window to sell any remaining tonnage before the end of August (after this, any unsold futures-linked beet will be sold by Czarnikow at the prevailing price on 1 September).
With macro uncertainty remaining high in the context of the US tariff policy, it is not clear that there is time for prices to recover significantly in this timeframe.
EU market developments
- EU processors forced to accept lower prices.
- France warns that the virus yellow incidence is high.
Like the UK, the beet belt in mainland Europe has experienced three heat waves during the summer so far. However, the arrival of rain after each of these events means that crops have developed well.
The major risk to production comes from disease, notably in France, where virus yellows are reported to be more prevalent this year than in any other year apart from 2020, when sugar yields fell by over 30%.
It is also too early to know what the impact of other diseases such as SBR (low sucrose syndrome), which is an issue in Germany, and RTD (rubbery taproot disease) will be. How this develops in the coming months will be critical to the outlook for sugar supply.
The sale of 2025/26 sugar in the EU has remained slow with buyers reluctant to accept the prices being offered by processors because they were higher than the cost of importing from the world market.
Producers in the Northwest EU were looking for prices around €600. However, sales are taking place at around €570/tonne, ex-works Northwest EU.
In the UK, sugar has been priced more competitively, meaning that sales have gone better than on the mainland. Spot prices are reported by Platts imply an ex-works price in the region of €590-610/tonne, ex-works.
A trader’s view
NFU Sugar Board appointee and sugar trader Paul Harper shares his thoughts on the current market situation.
NFU Sugar Board appointee Paul Harper
Paul has spent his entire career in commodities and has been in sugar since 1976. He joined C Czarnikow in 1973 working in their London, New York and Singapore offices. Paul has a huge amount of consultancy experience, having consulted for a hedge fund, major bank and a large trade house in sugar during that time.
The market has made a fairly significant rally following the low levels recorded at the end of June.
Selling from the funds has abated and at the time of writing their short position has been reduced although still stands at a significant size (around 6.4 million tonnes).
At the lower price level ethanol production increased in Brazil, further reducing the amount of sugar likely to be produced in this crop, which is continuing to show slow progress.
Weather in Europe has remained dry and expectations of lower crop numbers continue with rain desperately needed in some areas.
India, so far, has no such problems as rain continue to be above average. While crop progress appears healthy, with the market at lower levels, export availability is likely to remain low.
Pakistan is exploring the importation of both white and raw sugar over the coming months with local prices having risen considerably.
As we move into the second half of the year, the market for the time being appears to have found some support. Further selling from the funds is unlikely, unless the market makes new lows, and any confirmation of lower crop numbers or demand could provoke a sharp rally with funds short covering.
Policy perspective
This new section of the Beet Brief will spotlight some of the broader policy work undertaken by NFU Sugar on growers' behalf.
- Earlier this month, NFU Sugar, alongside British Sugar, secured emergency authorisation for the use of Coragen for beet moth control in 2025
- Growers are urged to stay abreast of the latest crop pest and disease updates via the BBRO Bulletin.