
Sugar prices hit lowest since 2021 as Brazil and India boost supply
Sugar prices have fallen to their lowest levels since June 2021, driven by higher yields in Brazil, India, and Thailand. While benefiting manufacturers, ongoing climate risks and production shifts keep the market outlook uncertain over the coming months.
Recent fluctuations in sugar prices have marked a significant shift in the global market, with prices now reaching their lowest levels since June 2021. Following a challenging two-year period characterised by extreme weather events and rising commodity prices that affected manufacturers across various sectors, the fall in sugar prices is emerging as a potential relief for the food and beverage industry.
The reasons for the price decline are multifaceted. Notably, increased sugar cane yields in Brazil have played a crucial role in augmenting the global supply of sugar. Analysts from Vesper indicate that Brazil's 2025/26 crop is expected to yield between 41 to 42 million tonnes, driven by farmers increasingly opting to produce sugar over ethanol due to better profitability. Additionally, Thailand's recovery from adverse weather conditions is projected to boost its sugar output to approximately 9–10 million tonnes, while India anticipates a production surge to 32–33 million tonnes, buoyed by favourable early monsoon developments. Gabrielle d’Arco, a market insights analyst, emphasized that these factors are easing supply concerns, which is instrumental in driving prices downward.
However, amidst this positive outlook, sugar beet production has faced challenges. The upcoming 2025 harvest is forecasted to drop due to a reduction in the planted area, as reported by Darren Peters of Tate & Lyle Sugars, who noted an estimated 9% decrease in sugar beet cultivation. This divergence in production trends underscores the complexities faced by the sugar market.
Looking ahead, while current indicators suggest that sugar prices will continue to decline, the situation remains volatile. D'Arco cautions that climate change poses ongoing threats to agricultural success, and the unpredictable nature of weather events can rapidly alter market dynamics. Moreover, historical patterns indicate that a decline in prices could trigger increased demand, potentially reversing the downward trend. For instance, following a brief drop in May 2024, China notably increased its sugar imports.
The implications of falling sugar prices are particularly pertinent for food and beverage manufacturers, who have been grappling with rising costs across the board. Sectors such as bakery, confectionery, and soft drinks, which have been most severely impacted by spiralling commodity prices, may benefit from the price drop. Nevertheless, challenges remain. Import tariffs, environmental compliance costs, and national sugar taxes have the potential to offset some financial advantages associated with reduced raw sugar prices. Furthermore, energy and packaging costs continue to exert pressure on budgets.
Some manufacturers have already taken proactive measures in response to soaring costs. For instance, Mondelēz International's CEO, Dirk Van de Put, indicated plans for a "straightforward price increase" on various products due to the earlier rise in sugar prices. Conversely, brands like Lindt & Sprüngli have focused on enhancing efficiency and adopting forward-looking purchasing strategies to mitigate costs. Those manufacturers who have resisted the urge to hike prices in response to raw material costs may find themselves reaping the benefits of the current market adjustment.
While the immediate future shows promise for a reduction in sugar prices, the overall landscape remains fraught with uncertainty. The intricate interplay of global supply factors, demand shifts, and macroeconomic influences is expected to dictate the direction of sugar prices in the coming months.