Sugar under control On the paradoxes of the global market

Since March, global sugar prices have been on a downward trend. However, Bloomberg experts warn that adverse weather conditions in Brazil—one of the world’s largest sugar producers—are expected to reduce supply and drive up demand later in the season. Despite these global market fluctuations, Azerbaijan has managed to increase its sugar production and exports by over 40% in the past five months. This success is largely due to the development of domestic production facilities and expanded sugar beet cultivation in recent years. As a result, Azerbaijan has significantly reduced its reliance on sugar imports and is confidently expanding exports to markets across Central Asia, the Middle East, Georgia, Russia, and beyond.

Raw sugar global prices have dropped by more than 21% over the past three months, hitting a four-year low due to increased supplies from India and Thailand, the world’s leading producers and exporters. Recently, July raw sugar futures fell to a minimum of $0.1582 per pound. According to the U.S. Department of Agriculture, global sugar production is expected to grow by 4.7% in 2025–2026, while global consumption is projected to rise by only 1.4%.

However, Bloomberg experts warn the market may be underestimating risks from adverse weather and rising transportation costs affecting Brazil, the world’s largest sugar producer. Data from Brazil’s national agency Conab shows a severe drought in 2024–2025 reduced sugarcane production by 3.4% to 44.118 million tonnes. Consequently, Bloomberg, citing Alvean, now expects the 2025–2026 global sugar surplus to shrink to just 400,000 tonnes—down from a 1.5 million tonne surplus forecast in March. Under these conditions, a global raw sugar deficit of around 5.5 million tonnes could emerge by September 2025.

Whether these factors will affect sugar prices and demand depends on several variables, including freight rates and this summer’s weather in South America. However, despite external market fluctuations, Azerbaijan has bounced back from last year’s production decline and is now showing strong growth in sugar production and exports.

Notably, 2024 was a challenging year for the domestic sugar industry, with production dropping by 8.7%. But according to the State Statistical Committee, between January and May 2025, Azerbaijan produced 118,000 tonnes of sugar and granulated sugar—40.6% more than the same period last year.

At the same time, data from the State Customs Committee shows that sugar exports reached over 18,606 tonnes in the first five months of 2025, up 41.7%. In monetary terms, exports were valued at more than $12.857 million, a 30.1% increase. Additionally, confectionery and other sugar-rich products exported during this period amounted to $13.792 million. Together, these exports contributed to a 33.8% overall growth in export value.

During the Soviet era, Azerbaijan had no domestic sugar production, so sugar supplies came mainly from Ukraine, Russia, and Cuba. After gaining independence, Iran and Türkiye also became key suppliers. However, Azerbaijan has since developed the South Caucasus’ largest and most modern sugar production facility: the Imishli Sugar Plant, part of the Azerbaijan Sugar Factory (Azərşəkər) production association, which began operations in March 2006.

Initially, the plant’s annual capacity was 60,000 tonnes, but it has since expanded to its full designed capacity of 300,000 tonnes, producing a variety of sugar products including granulated, powdered, lump, and pressed sugar. The facility also produces cattle feed, ethanol, and other by-products from processing waste materials.

The factory provides thousands of jobs in Imishli and across 24 districts, where sugar beet cultivation supports the raw material base. To strengthen this base, Azersun Holding has been assisting farmers in regions such as Barda, Imishli, Agstafa, and Gazakh, helping increase sugar beet production.

As of June 1, 2025, sugar beet cultivation covered 7,200 hectares, with plans to expand to 9,000 hectares and extend to 30 districts. Incentive systems for farmers are also evolving: in the 2023/2024 agricultural year, the purchase price per tonne of sugar beet was raised, and in 2025, subsidies are now differentiated based on the use of modern irrigation methods.

Subsequent reconstruction efforts have increased the Imishli plant’s processing capacity to around 1,800 tonnes of raw sugar per day, with a daily sugar beet processing capacity of up to 10,000 tonnes. In theory, the plant’s annual production capacity could reach 450,000 tonnes of sugar. However, actual market demand is much lower, reflecting domestic consumption levels.

According to the Food and Agriculture Organisation (FAO), the average annual sugar consumption worldwide is about 22 kilograms per person. In Azerbaijan, this figure is approximately 27 kilograms, compared to 34 kilograms in Russia and 33 kilograms in the United States. Given the significant volume of imported sugary products, total white sugar consumption in Azerbaijan—including food industry needs—does not generate enough demand to justify a substantial increase in domestic production.

Accordingly, “Azərşəkər” is steadily expanding its exports to countries including Uzbekistan, Kazakhstan, Kyrgyzstan, Turkmenistan, Tajikistan, Georgia, Russia, and Iraq. Export cooperation is particularly strong with Uzbekistan, where white sugar and sucrose accounted for the majority of Azerbaijani goods supplied to the market in 2024. Additionally, two years ago, agreements were reached to allow Uzbek companies to establish a terminal at the Baku International Sea Trade Port (BISTP), which will facilitate the storage and transit of sugar shipments.