Sugar Market Analysis 2025: Dwindling Supply Meets Weak Demand Amid Global and Domestic Strains

The global and domestic sugar market finds itself at an uneasy crossroads in mid-2025. On one hand, adverse weather across key producing states like Maharashtra and Karnataka has curtailed sugarcane yields, compounding the issue of shrinking supply. On the other, overall demand remains surprisingly subdued—both at the industrial and consumer levels—making it difficult for mills to move their government-assigned quotas despite historically low buffer stocks managed tightly by the Food Corporation of India (FCI).

Significant amounts of sugarcane are also being diverted for ethanol production, adding another layer of supply pressure. Meanwhile, global market volatility and ambiguous ethanol policies have further muddied export prospects. The result is a market characterized by declining production (significantly lower than last year’s 29.5 million tons), restricted pipeline stock, and weak open-market activity—even with tighter inventory controls. With the 2024-25 season expected to be critical in terms of supply, all eyes are on upcoming seasonal weather patterns, policy shifts, and potential changes in consumer habits that could abruptly disrupt or sustain this fragile balance.

📈 Sugar Prices at a Glance

Product	Type (ICUMSA)	Origin	Location	Delivery	Current Price (EUR/kg)	Previous Price (EUR/kg)	Change (%)	Update Date	Sentiment
Sugar granulated	45 (0,2-1,2 mm)	LT	Mirijampole, LT	FCA	0.55	0.53	+3.8%	2025-07-16	Cautiously Bullish
Sugar granulated	45 (0,2-1,2 mm)	LT	Mirijampole, LT	FCA	0.56	0.54	+3.7%	2025-07-16	Cautiously Bullish
Sugar granulated	32 (0,300-0,600 mm)	GB	Norfolk, GB	FCA	0.56	0.56	0.0%	2025-07-16	Stable

🌍 Supply & Demand Drivers

• Supply Decline: Production this season is significantly lower than last year’s 29.5 million tons, with adverse weather and increasing sugarcane diversion to ethanol as critical factors.
• Government Quotas: Monthly quotas released, but sales remain tepid due to persistently weak demand; mills are unable to sell even up to their allocated volumes.
• Demand Weakness: Industrial and consumer demand remains lackluster, hitting both open market and pipeline movement.
• Buffer Stock Tightness: FCI is managing a buffer stock covering only 5–7 days, far less than the typical 21-day inventory level.
• Export Headwinds: Global price volatility and uncertainty in ethanol policy have dampened export enthusiasm, keeping sales focused inward despite tight supplies.
• Seasonal Factors: Seasonal sluggishness is suppressing bulk buying, limiting short-term demand recovery prospects.

📊 Fundamentals & Market Balance

• Sugarcane Diversion: More cane allocated for ethanol has compounded supply issues. India’s ethanol blending policy continues to influence millers’ production choices.
• Weather Impact: Limited rainfall in Maharashtra and Karnataka reduces cane availability for both sugar and ethanol output.
• Pipeline Stocks: Stocks at both local and national levels are running extremely thin, raising potential for volatility should weather or demand surprise on the upside.

Global Production & Stocks (Select Countries)

Country	2023/24 Production (Mt)	2024/25 Estimate (Mt)	Inventory Trend
India	~29.5	Significantly Lower	Depleting
Brazil	42.0	Stable	Moderate
Thailand	10.5	10.7	Stable
EU	16.5	16.2	Stable

☁️ Weather Outlook for Key Regions

• Maharashtra and Karnataka are forecast to receive below-normal rainfall for the next week, prolonging the ongoing drought stress on sugarcane crops.
• Monsoon progression elsewhere in India is moderate, but insufficient to offset deficits in critical sugarcane belts.
• Brazil’s Center-South region expects dryer-than-average conditions, slightly supporting global prices due to potential harvest delays.
• Near-term weather risks are biased to the downside for Indian sugar output, with potential for further revisions to 2024/25 production outlook.

📆 Trading Outlook & Recommendations

• 📈 Producers: Maintain tight inventory control and monitor government quota announcements. Favor short-term spot selling when minor demand upticks appear.
• 🔍 Traders: Focus on short-term volatility plays, as global supply headwinds have yet to translate into price surges due to persistent weak demand.
• ⚠️ Buyers: Consider forward contracting for Q4 2025, as any demand uptick or weather-related supply shock could trigger sharp price moves given tight pipeline stocks.
• 🌎 Exporters: Watch for renewed international activity if global stock deficits deepen and Indian supply fails to recover.

⏩ 3-Day Regional Price Forecast (EUR/kg)

Date	Mirijampole (LT)	Norfolk (GB)	Vyškov (CZ)	Berlin (DE)
2025-07-17	0.55–0.56	0.56	0.54–0.56	0.67
2025-07-18	0.55–0.57	0.56	0.54–0.56	0.67
2025-07-19	0.56	0.56	0.55–0.57	0.67–0.68