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Analysis Sugar

Sugar prices make a big move upwards

September 25, 2024 - Alex Jurvillier

The sugar prices in London and New York on the ICE have been showing a significant upward trend for a week. Various parties are further lowering the production expectations for the world's largest sugar producer, Brazil.

The price in New York was $422.85 on September 16 and in London $523 per ton of sugar. Currently, sugar is at $509.71 per ton in New York and $595.40 per ton in London. A considerable increase, with a slight weakening in the last day.

Various parties expect a smaller harvest in Brazil, the largest producer, which is influencing market sentiment. The Brazilian government agency Conab has revised its production expectations for Brazil downwards, and market bureau Czarnikow did the same for global production. Just before the weekend, Wilmar, which produces sugar among other products, also adjusted its expectation for Brazil. Wilmar has lowered its sugar production expectation, partly due to prolonged drought and the fires at the end of August. The food giant adds that weather conditions may improve in October, but it is unlikely to have impact on the current harvest.

The consequences of fires in Brazil are estimated to be high, by major parties. In a webcast on YouTube, the CEO of the Brazilian SCA Brasil, Martinho Ono, estimates that the number of hectares affected in the main production region in recent months is 400,000. Wilmar mentions 450,000 hectares.

Last week, the Brazilian sugarcane association Unica reported that 3.3% less sugarcane was processed in the main production region in the second half of August. Sugar production in the second half of August was 3.25 million tons, 6% lower than the same period last year. The total sugar production since the beginning of the season was 3.9% higher (27.17 million tons in total).

Ukraine export figures
News closer to home concerns Ukraine. According to data from the Ukrainian Ukrsugar, the country exported a total of 691,800 tons of sugar in the 2023/24 season, which ran from September to August. 77% went to Europe and 23% to other markets. Italy was the largest importer, receiving 19% of Ukrainian sugar heading to Europe. Bulgaria ranked second with 18% and Hungary accounted for 14%.

Higher yield of European sugar beets per hectare
In the latest JRC Mars bulletin published earlier this week, the expected yield of sugar beets in the European Union for 2024 has been raised to 74.7 tons per hectare. In August, 73.4 per hectare was expected. This is partly due to favorable weather conditions in parts of Western Europe. The expected yield of sugar beets is higher than the five-year average of 73.1 tons per hectare.

Alex Jurvillier

Alex Jurvillier is a market specialist in sugar and cacao at DCA Market Intelligence. He also monitors the milk supply in the most important dairy countries and keeps an eye on developments in food.
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