Sugar Market Analysis: Ethanol Price Tensions and Stable Spot Prices Define Outlook

The global sugar market is currently navigating a complex interplay of policy, cost inflation, and stable spot prices. In India, a major player in both sugar production and consumption, the industry is raising alarms over a growing disconnect between the Fair and Remunerative Price (FRP) for sugarcane and government-regulated ethanol prices. Over the past two years, sugarcane FRP has surged by 11.5%, while ethanol prices have remained static, squeezing margins for distilleries and threatening the viability of sugarcane diversion to ethanol. This pricing imbalance is particularly pronounced when comparing ethanol derived from maize, which commands a higher price despite lower feedstock cost increases. The Indian Sugar and Bio-Energy Manufacturers Association (ISMA) warns that without timely government intervention to adjust ethanol prices in line with the FRP, the country’s ambitious ethanol blending targets and sugarcane diversion framework could be at risk. Meanwhile, spot sugar prices across key European locations remain steady, reflecting a balanced physical market, but the policy uncertainty in India could have ripple effects on global trade flows and price sentiment in the coming months. With weather patterns and production forecasts also in focus, the next few weeks will be crucial for market direction.

📈 Prices

Origin	Type	Location	Price (USD/kg)	Weekly Change	Update Date	Sentiment
GB	ICUMSA 32, 0.300-0.600 mm	Norfolk	0.56	0.00	2025-05-20	Neutral
GB	ICUMSA 32, 0.450-0.600 mm	Norfolk	0.56	0.00	2025-05-20	Neutral
GB	ICUMSA 45, 0.212-0.425 mm	Norfolk	0.56	0.00	2025-05-20	Neutral
DE	ICUMSA 45, 0.4-0.65 mm	Berlin	0.66	0.00	2025-05-20	Neutral
CZ	ICUMSA 45, 0.5-0.75 mm	Vyškov	0.55	0.00	2025-05-20	Neutral
UA	ICUMSA 45, 0.4-1.00 mm	Vinnytsia Oblast	0.58	0.00	2025-05-20	Neutral
LT	ICUMSA 45, 0.2-1.2 mm, 99.7%	Mirijampole	0.53	0.00	2025-05-19	Neutral

🌍 Supply & Demand

• India: Ethanol price policy is a key variable. Rising FRP and static ethanol prices could reduce sugarcane diversion to ethanol, potentially increasing sugar availability for food markets in the medium term.
• EU: Production remains stable with no significant weather disruptions reported. Stocks are comfortable, and export activity is moderate.
• Brazil: Harvest is progressing well, with dry weather supporting cane crushing. Ethanol parity continues to influence millers’ production decisions, but no major supply shocks are anticipated.
• Global: The International Sugar Organization (ISO) projects a slight surplus for 2024/25, but policy changes in India could quickly alter this balance.

📊 Fundamentals

• Indian FRP (2022–2025): Up from $3.66 (2022–23) to $4.08 per quintal (2024–25).
• Ethanol Prices (India): Unchanged at $0.79/litre (juice), $0.73 (B-heavy), $0.59 (C-heavy) since 2022–23. Industry expects $0.88/litre (juice) for FRP $4.08.
• Investment: $4.8 billion in Indian ethanol capacity, now at 8.5 billion litres.
• Speculative Positioning: Managed money net longs have decreased slightly on ICE, reflecting a neutral-to-cautious sentiment.

⛅ Weather Outlook

• India: Monsoon onset is timely, but rainfall distribution is uneven. Western Maharashtra and Karnataka could see below-average rains, potentially impacting cane yields if the pattern persists into June.
• Brazil: Dry, sunny weather is aiding harvest and crushing, with no immediate frost threats.
• Thailand: Adequate soil moisture, but watch for late-season dryness.

Potential Effects: If Indian rains underperform, cane yields and sugar output may fall, tightening global supplies. Brazil’s strong harvest could offset some of this risk, but weather volatility remains a key watchpoint.

🌐 Global Production & Stocks

Country	2023/24 Production (mln t)	2023/24 Stocks (mln t)	2024/25 Forecast (mln t)
Brazil	42.0	5.2	43.0
India	33.5	6.0	32.0
EU	15.5	2.2	15.3
Thailand	8.8	1.0	9.0
China	9.8	2.0	10.0

📆 Trading Outlook & Recommendations

• Monitor Indian government decisions on ethanol pricing—any upward revision could reduce sugar supply and support prices globally.
• Short-term price action is neutral; spot prices are stable across major European origins.
• Weather in India and Brazil is a key risk—watch for potential monsoon disruptions.
• Physical buyers should consider forward cover if Indian policy remains unresolved into June.
• Speculators: Hold neutral positions; upside risk if Indian cane yields disappoint or ethanol pricing is revised aggressively upward.

🔮 3-Day Regional Price Forecast

Region/Exchange	Current Price (USD/kg)	Forecast Range (USD/kg)	Trend
UK (Norfolk FCA)	0.56	0.55–0.57	Stable
Germany (Berlin FCA)	0.66	0.65–0.67	Stable
Czech Rep. (Vyškov FCA)	0.54–0.55	0.54–0.56	Stable