“Sugar Prices Surge as Indian Production Declines – Supply Concerns Drive Market Rally”
Closing Prices on February 4, 2025 (ICE Sugar No. 5) Converted to EUR
Using a USD/EUR exchange rate of 0.92, the latest closing prices for ICE Sugar No. 5 in EUR are as follows:
Contract | Closing Price (USD/t) | Closing Price (EUR/t) | Change (EUR) | % Change |
---|---|---|---|---|
March 2025 | 526.80 | 484.66 | +11.68 | +2.41% |
May 2025 | 511.60 | 470.67 | +7.64 | +1.62% |
August 2025 | 493.90 | 454.39 | +6.44 | +1.42% |
October 2025 | 484.80 | 446.02 | +4.51 | +1.01% |
December 2025 | 481.80 | 443.26 | +2.67 | +0.60% |
March 2026 | 484.80 | 445.62 | +1.75 | +0.39% |
May 2026 | 486.70 | 447.76 | +1.75 | +0.39% |
August 2026 | 488.00 | 448.96 | +1.75 | +0.39% |
October 2026 | 486.40 | 447.49 | +1.29 | +0.29% |
December 2026 | 486.40 | 447.49 | +0.92 | +0.21% |
March 2027 | 487.90 | 448.87 | +0.92 | +0.20% |
May 2027 | 485.30 | 446.48 | +0.92 | +0.21% |
August 2027 | 485.10 | 446.29 | +0.92 | +0.21% |
October 2027 | 484.40 | 445.65 | +0.92 | +0.21% |
Market Analysis: Indian Supply Concerns Trigger Price Rally
The recent surge in sugar prices is directly linked to news from India, the world’s second-largest sugar producer.
- Sharp Decline in Indian Sugar Production:
- India’s sugar production for the 2024-25 season is expected to decline by 17%, dropping to 26.52 million tonnes, according to the All-India Sugar Trade Association (AISTA).
- This is a sharp fall from 31.90 million tonnes in the previous season, primarily due to adverse weather conditions and disease outbreaks in key sugarcane-growing regions.
- Tightening Global Supply Outlook:
- India’s sugar closing stocks are forecast at just 4.50 million tonnes by September 30, 2025.
- If these estimates hold, India’s sugar stocks will drop below two months’ domestic demand, a situation not seen in years.
- October-November sugar demand in India is projected at 4.80-5.00 million tonnes, driven by festival consumption.
- Market Reaction – Strong Buying Interest:
- With India’s export potential severely impacted, traders anticipate a tighter global supply situation.
- The March 2025 contract surged by +2.41%, reaching €484.66/t, while May 2025 rose +1.62% to €470.67/t.
- The bullish momentum has extended across all contracts, with long-term positions also showing gains.
EU Sugar Market: Stability Despite Global Supply Concerns
- The EU sugar market remains unchanged, with prices stable between €0.50/kg and €0.54/kg FCA EU.
- Demand remains weak, as most major buyers have already secured their contracts.
- Market estimates suggest that around 30% of sugar volumes are still uncovered, but buyers are hesitant to enter the market at current levels.
- Despite the global price recovery, the European market has yet to react, with no immediate signs of upward pressure on prices.
Market Outlook: Will the Rally Continue?
📈 Short-Term:
- The Indian sugar production shortfall has triggered bullish sentiment, and if supply concerns persist, further price increases are possible.
- Markets will closely watch India’s government response, as any export restrictions could push prices even higher.
📉 Long-Term:
- If the EU market remains stable, it could act as a buffer against global price volatility.
- However, India’s weakened production outlook could have ripple effects, especially if other key producers also face challenges.
🔍 Strategic Recommendations:
- Buyers should closely monitor global developments, as supply risks are increasing.
- Producers should capitalize on the price surge, securing contracts while demand remains strong.
Conclusion
The sugar market has entered a strong bullish phase, with global prices surging due to India’s production shortfall. While the EU market remains stable, the long-term impact of India’s declining stocks could push prices higher in the coming months. Market participants should stay alert to further developments, as volatility is expected to continue.
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