Falling global sugar markets put pressure on domestic prices
© GNP Bearish global sugar markets and increased supply have weighed on prices across Europe throughout 2024.
A global surplus is forecast by traders for next year and into 2026, based on current crop conditions, which has dampened market sentiment.
The sugar beet crop in the UK returned to more normal levels, after a reduced crop last year.
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Associated British Foods, parent company to British Sugar, noticed a sharper than expected fall in UK and European sugar pricing due to an increased supply in the market.
George Weston, chief executive of Associated British Foods, said: “Sugar profitability this year remains ahead of FY23 [2023 Fiscal Year], however, it is below our previous expectations.”
He said this was due to a sharp fall in European sugar prices which are expected to impact sugar profitability for the 2025 financial year before recovering in 2026.
Domestic sugar beet prices are heavily influenced by global sugar markets and a larger global surplus could impact on trade for some time.
NFU Sugar board appointee and sugar trader, Paul Harper, said: “Brazil is still the main supplier and while crop conditions remain relatively stable, it is clear that they are unlikely to match last year’s exports.
“Just how much sugar is produced will depend on how the crop fares towards the end. India is unlikely to export any sugar at the current market level although is a potential seller should the market make significant gains.
“We could see the market continue to trade in the recent range for a while unless anything changes. With the European crop under way and Brazil moving into the second half of their crop year, any unexpected numbers will likely dictate the next move.”
UK contracts
A fixed price of £33/t for the 2025-26 sugar beet crop was agreed earlier this year by NFU Sugar and British Sugar.
However, a proportion of the contract is made up of either a futures-linked price or a base price of £30.70/t plus an improved market-linked bonus.
NFU Sugar commercial and market insight manager Arthur Marshall said: “The maximum proportion of contract tonnage that can be put on the £33/t fixed price contract is 70%, but it is possible to put a smaller proportion on the fixed price contract and more than 30% across the other choices.”
Mr Marshall added that reports from the Continent pegged European sugar prices at about €480-€525/t (£405/t-£442/t) for 2024-25, down from €570/t (£480/t) earlier this summer.