NFU Sugar explains reasons behind sugar price fall
23rd January 2025
NFU Sugar experts have shared their opinion of the effect of currency movements on sugar prices.
NFU Sugar’s commercial and market insight manager Arthur Marshall said that the weakening sterling recently has supported sugar prices in sterling terms.
Oct-25 raw sugar futures, traded in US$, have dropped over the past few months, but this has been partly offset by sterling also weakening against the US dollar.
In £ per beet tonne terms, sugar futures prices have fallen by c.£3.70/t, while the sterling/US dollar exchange rate remained at the same level since 1st October. Prices would be a further £4.20/t lower in beet terms now, NFU Sugar has reported.
However, relative to the European sugar market, which is denominated in euros, UK sugar prices have received less support from currency movements.
The expert added that the strength of the US dollar has had various impacts on sugar markets around the world.
EU average white sugar prices had suffered their largest month-on-month change in October 2024 since the managed market ended, and price reporting for November shows values continued to slide.
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Market expected to settle
NFU Sugar Board appointee and sugar trader Paul Harper has also shared his thoughts on the current market situation.
He said that following a brief rally around the end of 2024, a lack of demand, low white premiums and a return to a major short position by the speculative element has seen the futures market return to the lower levels seen last year.
“Weather continues to remain stable in major cane growing areas while the European crop appears to be continuing unhindered.
“The recent catastrophic fires in Los Angeles are a reminder of how quickly weather can change but without any major issues being seen in major sugar producing areas.
“It would appear that the expected surplus for the second half of 2025 is likely to be confirmed and the market may well have to settle into a more bearish stance until something changes,” the expert said.
According to the World Association of Beet and Cane Growers’ Flashmarket newsletter on 6th December, by Timothé Masson, world prices fell sharply in December, with raw sugar futures down more than 7% and refined sugar futures down more than 5%. As a result, raw sugar has fallen below 20c/lb, a level not seen since last September.
The reason for this price fall is more to be found in currency parities: the strength of the dollar since Trump’s election in the US is historic and all currencies are suffering.
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