Sugar fails to reassure investors – global prices at four-year low

Yesterday sugar prices on global markets fell to their lowest level in four years. Futures contracts fell by 3,2 percent in a single day, and year-on-year, their price fell by as much as 34 percent. This is the largest annual price drop since 2017. In Poland, according to data from the Central Statistical Office, sugar in stores is 23 percent cheaper today than a year ago, and the price of a kilogram of sugar in supermarkets has dropped below PLN 3.

The situation in Brazil is behind the decline in global sugar prices

Brazil is the world's largest sugar producer. The rapid expansion of corn-based ethanol production there has shifted the balance of power across the sector. Corn-based biofuel has proven cheaper to produce than traditional sugarcane-based ethanol, leading sugarcane processors to increasingly divert their production to sugar production.

According to forecasts, global sugar production will exceed consumption by 2,8 million tons in the 2025-2026 season. This is a reversal of the situation last year, when the market was in deficit. Brazilian sugar mills plan to produce a record 43 million tons of sugar next year, almost 5 percent more than the year before. At the same time, the share of corn ethanol in Brazilian biofuel production is forecast to increase from 23 percent to 32 percent. An oversupply of this raw material could further lower its prices, which will only increase pressure for further increases in sugar production.

On the global market Brazylia Today, it accounts for approximately 24% of global sugar production, or 43,7 million tons. India comes in second with a 15% share and production of 28 million tons, although drought and export restrictions have limited the sector. Third place is occupied by the European Union with a 9% share and production of 16,5 million tons, mainly from sugar beets. Poland, with a record 2,577 million tons in the 2024/2025 season, ranks third among EU producers. Next in the rankings are China and Thailand, both accounting for approximately 6% of global production, each producing 10-11 million tons annually. Combined, these five producers account for over 60% of global production, which means their production decisions almost immediately translate into prices on global markets.

Sugar price drops are also visible in Polish stores.

According to data GUS In September, the price of sugar in stores has fallen by 23 percent over the past year. A kilogram of sugar can now be purchased in supermarkets for less than 3 złoty, compared to around 4,5 złoty a year ago. This helps lower inflation, as this raw material is widely used in the food industry and indirectly influences the prices of many products.

Sugar isn't exactly encouraging this time, at least not for investors. But it's good news for consumers and food producers, as the decline in the price of this commodity could be one of the factors easing inflationary pressures in the coming months.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.