Simon Hood, Wilmar Manager Grower Marketing
As factories across our regions ramp up operations for the production season, the global sugar price remains under pressure.
Recent figures from Brazil, the world's largest sugar producer, show a strong fortnight of crushing activity in the second half of May, according to UNICA. Brazil is now just 12% behind its 2024 crushing pace. Its sugar mix reached nearly 52% for the period, bringing the season-to-date balance to an even 50/50 split between sugar and ethanol. Brazil's CCS levels are finally improving after a slow start.
However, one key piece of the Brazil production puzzle remains uncertain: cane yield, or tonnes of cane per hectare. This figure is gathered from various sources, but the industry standard often relies on CTC data. The May report is due soon, and historically, May has marked the peak for yields. Over the past 23 years, average crop yields haven't surpassed the May benchmark, so this next report will be one to watch.
Ethanol parity is another factor influencing the #11 sugar price. There's talk the Brazilian government may raise its ethanol blending mandate from 27% to 30% a 10% increase that could support prices. At the same time, however, Brazil's booming corn ethanol industry continues to add supply, which may offset some of the support for sugar prices. Oil prices - which impact ethanol demand are on the rise, but they remain volatile due to global macroeconomic events.
In short, the price outlook remains uncertain. Some market commentators suggest most of Brazil's 2025 export sugar has been hedged at stronger prices, while much of the remaining production, including grower sugar, is still to be priced. For the first time, we're also hearing murmurs of demand softening, which is notable given sugar prices have fallen nearly 40% since their late 2023 highs.
With market pressure still weighing on prices, we're left hoping the old saying proves true - that low prices eventually cure low prices.
For those wanting to hear more about what is affecting the global sugar market, keep an eye out for our Global Traders Roadshow being held in July. Wilmar's senior sugar traders Peter Bingham and Neil Foo will be presenting on the current state of play and what will be influencing prices this year.
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