Sugar markets are experiencing significant downward pressure, with NY#11 futures recently dropping to 16.4 cents per pound, the lowest level since June 2021. This dramatic decline reflects growing expectations of a global exportable surplus, driven by improved production outlooks across key sugar-producing regions.

Global market dynamics point to oversupply

The bearish sentiment in sugar markets stems from a confluence of factors indicating increased global supply. Brazil’s Centre-South region, the world’s largest sugar-producing area, is showing signs of production recovery despite early-season challenges. Meanwhile, favorable weather forecasts in major Asian producers India and Thailand are reinforcing supply-side optimism.

Current Global Pricing (June 10, 2025):

The combination of improved production prospects and subdued import demand from major consuming countries has created a perfect storm for continued price weakness in the near term.

European market shows mixed signals

While global markets face oversupply pressures, European sugar markets present a more nuanced picture. Beet acreage has declined by approximately 7%, and persistent dry conditions across key EU growing regions are beginning to stress crops.

European Regional Pricing (June 11, 2025):

  • West-EU Vesper Price Index: €597/mt DAP
  • South-EU VPI: €600/mt DAP
  • East-EU VPI: €571/mt DAP

The European market’s cautious outlook reflects the delicate balance between reduced planted area and weather-dependent yield potential. With import parity levels nearly aligned with domestic prices at around €600/mt, the region’s pricing structure remains vulnerable to global supply dynamics.

Brazil: recovery momentum building despite slow start

Brazil’s 2025/26 Center-South season began sluggishly, with cumulative cane processing down 20.2% year-on-year through mid-May. However, recent data suggests momentum is building, with drier weather conditions supporting improved crushing operations.

The sugar mix has increased to 48.6%, up from previous levels, indicating mills are favoring sugar production over ethanol. This shift, combined with improving weather conditions, supports expectations for stronger production in the coming months.

Brazil’s government is also considering raising ethanol blend mandates from E27 to E30, a decision that could reshape domestic demand dynamics and influence the sugar-ethanol production balance.

Market outlook: supply fundamentals drive bearish sentiment

The convergence of multiple supply-positive factors has created a challenging environment for sugar prices:

  • Global surplus expectations from improved production in key origins
  • Weather improvements supporting crushing operations in Brazil
  • Subdued import demand from major consuming regions
  • Limited upside catalysts in the near-term outlook

While European markets face some supply constraints due to reduced acreage and dry conditions, these regional factors appear insufficient to offset broader global surplus pressures.

What this means for market participants

The current market environment presents both challenges and opportunities for different stakeholders in the sugar supply chain. Buyers may benefit from extended periods of lower pricing, while producers face margin pressures that could influence planting and production decisions for future seasons.

The sustainability of current price levels will largely depend on actual production outcomes in key regions and any shifts in global demand patterns.

For complete market analysis, pricing data, and strategic insights, access the full week 24 Vesper sugar market report on our platform: https://app.vespertool.com/market-analysis/2007