High oil prices support sugar market

The broader developments in the commodity markets and especially the unrest in the Middle East give sugar a boost. For sugar to make a real leap, oil prices need to remain high according to various analysts. With the current US president, anything can happen in that regard. After a dip in mid-February where sugar reached its lowest point in about five years, sugar is on the rise again. However, it is not entirely enthusiastic. A substantial harvest, particularly of sugarcane in Asia, is somewhat dampening the market. The tensions in the Middle East, especially the closure of the Strait of Hormuz by Iran in response to the American/Israeli attacks, could provide additional support to sugar if it lasts for a long time. The latest sugar balance from the International Sugar Organization (ISO) is moderately bullish for the sugar market. The surplus for the 2025/26 season is now estimated at 1.2 million tonnes compared to 1.6 million a month earlier. The deficit on the balance sheet for the 2024/25 season amounts to 3.5 million tonnes according to ISO compared to 2.9 million tonnes in the previous forecast. On the physical European sugar market, there is no sign of a revival yet. The figures from the European Commission are a bit behind, but compared to December, the price fell by €2 to €516 per tonne. For comparison: last January, the sugar price was still at €559. This is, by the way, the average price at the factory for bulk or big bags of granulated sugar delivered. Biofuel According to the Indian Association of Sugar and Biofuel Producers, India produced 24.75 million tonnes of sugar from October 1 to February 28. This yields 12% higher than the same period last season. The total production for the current season is estimated at 29.3 million tonnes compared to 30.95 million tonnes in the previous estimate. In this estimate from March 6, ISMA still assumed that less sugar would end up in ethanol. However, if crude oil remains well-priced, that could change, the organization said. High fuel prices are not only an issue in India or here. Even in Brazil, the world's largest sugar producer, expensive gasoline is being felt. It is still too early to attach figures to it, but analysts also expect that more sugarcane will disappear into ethanol if oil remains relatively expensive. From the growers' perspective, it is a case of fortunate in misfortune that energy forms an outlet for a surplus of sugar in this way. Fickle president Under the current American president, policies can certainly change quickly, but it does not seem that there is a quick end to the war in Iran. In fact, NATO was earlier almost written off by Trump, but in an interview with the Financial Times, Trump stated that NATO is facing 'a bleak future' if alliance members do not step in to reopen the Strait of Hormuz. Let's hope for Trump that his adventure in Iran doesn't turn out the same as it did for Jimmy Carter, the previous American president who undertook a military action in Iran. Besides oil, several countries in the Middle East are also important players in the fertilizer market. Farmers feel that in their wallets. The Brazilian fertilizer producer Agrion Fertilizantes launched a plan last week to produce fertilizers from waste streams of the sugarcane chain. With this, the fertilizer supplier aims to make Brazil less dependent on imported fertilizers from abroad. Of the more than 40 million tonnes of fertilizers that the country imports, about 85% comes from abroad. Agrion Fertilizantes aims to produce 500,000 tonnes of fertilizers from sugar industry waste by 2031. The company currently has a production capacity of 40,000 tonnes per year. Of course, this is not a very large segment of the total Brazilian fertilizer consumption that can be replaced in this way.