European beet acreage decline and dry conditions create supply concerns amid broader bearish outlook

May 28, 2025 – Vesper Market Analysis

Sugar markets remain under significant pressure this week as global surplus expectations continue to weigh on prices, with Sugar No. 11 (Raw) falling to $17.2/lb and Sugar No. 5 (White) dropping to $483/mt as of May 27, 2025. The bearish sentiment is being reinforced by strong shipping nominations from Brazil’s Center-South region and improving production outlook in Thailand.

European market shows cautious stability

While global markets face downward pressure, European sugar prices are holding steady with mixed regional dynamics creating a more complex picture. The West-EU Vesper Price Index stands at €600/mt DAP, with Germany maintaining the same level while other key markets show slight variations across the continent.

Critical supply concerns are emerging following the International Confederation of European Beet Growers (CIBE) report of a 7% reduction in EU27 beet acreage. When factoring in the UK’s expected 8% cut, the total EU28 area reduction could reach approximately 7.4% – higher than initial projections of 5-6%.

The situation is compounded by severe drought conditions affecting key growing regions. France, a major beet producer, recorded just 69mm of rainfall from February to April – only one-third of the usual volume for this critical period. This has created significant stress on young beet crops, with some UK regions already showing early signs of crop distress.

Brazil maintains export momentum despite slower start

Brazil’s sugar sector presents a mixed picture, with accumulated April figures showing a 33% decline in cane crush to 34.3 MMT and sugar output falling 38.6% to 1.58 MMT compared to the previous year. However, strong export nominations for May remain firm at 2.76 MMT, with China accounting for over 500,000 tonnes, indicating robust international demand.

The short-term Brazilian outlook remains bearish as production is expected to accelerate with improving weather conditions, potentially easing supply concerns and maintaining downward pressure on global prices.

Market outlook: Weather becomes key price driver

Current market sentiment reflects a cautious holding pattern, with limited trade activity and scarce market offers creating subdued near-term price movements. However, the developing drought situation in Europe could become a significant price catalyst if conditions deteriorate further.

Key factors to watch:

  • Continued dry weather impact on European beet crops
  • Brazilian production recovery pace
  • Chinese import demand sustainability
  • EU policy responses to crop stress conditions

The European market’s short-term outlook remains neutral but increasingly weather-dependent, with prices likely to edge higher if drought conditions persist or worsen across key growing regions.

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