“EU Sugar Market: Weak Demand, Rising Global Prices – Signs of a Turning Point?”
Summary of Price Movements (Closing Prices in EUR/t)
Using a USD to EUR exchange rate of 0.92, the ICE Sugar No. 5 closing prices are as follows:
| Contract | Closing Price (EUR/t) | Change (EUR) | % Change |
|---|---|---|---|
| March 2025 | €448.75 | +€8.56 | +1.91% |
| May 2025 | €443.35 | +€5.34 | +1.20% |
| August 2025 | €432.31 | +€3.77 | +0.87% |
| October 2025 | €429.18 | +€2.67 | +0.62% |
| December 2025 | €432.40 | +€2.58 | +0.60% |
| March 2026 | €436.02 | +€2.21 | +0.51% |
| May 2026 | €438.41 | +€2.02 | +0.46% |
| August 2026 | €441.14 | +€2.39 | +0.54% |
| October 2026 | €440.22 | +€1.75 | +0.40% |
| December 2026 | €440.96 | +€1.10 | +0.25% |
| March 2027 | €442.18 | +€1.10 | +0.25% |
| May 2027 | €441.23 | +€1.10 | +0.25% |
| August 2027 | €441.05 | +€1.10 | +0.25% |
| October 2027 | €440.40 | +€1.10 | +0.25% |
Weak EU Demand, Strong Global Markets
The EU sugar market continues to experience weak demand, with prices ranging between €0.50/kg and €0.54/kg FCA, driven by high stocks and cautious buyer behaviour. In contrast, global sugar markets show strength, as evidenced by rising ICE Sugar No. 5 prices. This divergence signals a potential turning point for the European market.
Key Developments
- Diverging Dynamics: EU vs. Global Markets:
- While high inventories and delayed purchases weigh down the EU market, the global market reflects rising demand. The recent surge in ICE Sugar No. 5 prices suggests that international buyers are positioning themselves for tighter supply in the months ahead.
- Global Demand Drives Prices:
- The upward trajectory of ICE Sugar No. 5 prices indicates stronger global demand, possibly driven by pre-season stockpiling and preparations for peak consumption periods like Easter.
- Seasonal Demand in the EU:
- With Easter approaching, seasonal demand in the EU is expected to rise. Many buyers still have open positions to cover, which could reverse the current downward pressure on prices.
Challenges in EU Pricing Policies
- Unequal Treatment of Customers:
- Large retailers, such as ALDI in Poland, can offer sugar at prices as low as €0.44/kg (after removing VAT), while smaller businesses face significantly higher costs. This pricing imbalance disproportionately impacts smaller market participants.
- Producers Under Pressure:
- Despite frequent complaints about low margins, EU producers sell sugar to large buyers at prices close to global levels. This contradictory behaviour raises questions about the efficiency of their pricing strategies.
- Long-Term Risks:
- Favouring large customers over smaller ones risks alienating small and medium-sized businesses, potentially destabilizing the broader market ecosystem.
Outlook: Signs of a Turning Point
Despite weak demand in the EU, global market trends point to an impending price recovery. The combination of rising global prices and seasonal demand could soon drive up EU sugar prices. Key considerations include:
- In the EU: Buyers should take advantage of current low prices before the anticipated rebound.
- Globally: The upward trend in ICE Sugar No. 5 prices signals stronger international demand, which may influence European pricing in the long term.
Conclusion
The discrepancy between weak EU demand and rising global prices highlights the shifting dynamics in the sugar market. While EU prices remain low for now, global trends and seasonal demand could soon lead to significant price increases. Market participants should closely monitor these developments and act swiftly to adapt to changing conditions.