Südzucker: Trading Idea closing
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In recent weeks, there was a significant price increase in the sugar market, about which we have been fairly optimistic previously. This is primarily due to the fact that supply may be tighter as a result of higher biofuel prices and drier-than-usual weather in India. This was, of course, a positive development for companies such as Südzucker, which is one of the world’s largest sugar producers and a leading European player in biofuel production. As a result, the company’s stock price also jumped, reaching our previously set target price of 12.9 euros during yesterday’s trading, hence it may be worth realizing the roughly 15% return achieved in 1.5 months. While we are closing our Trading Idea, we are still keeping Südzucker’s shares on our Equity Top Pick List.
The price of sugar began to rise rapidly at the end of July, breaking out of multi-year lows and reaching levels not seen since the spring of 2025. This is primarily due to the fact that supply may be tighter than previously expected. One reason for this is that, due to the war in Iran, prices for biofuels (ethanol) have surged alongside those of various petroleum products (e.g., diesel). This is important because, in addition to corn, sugarcane is one of the most important raw materials in the biofuels space. This means that when ethanol prices are high, biofuel production diverts a portion of available crops away from sugar production.
This is already evident in the production data from Brazil, the world’s largest sugar producer. According to the latest report from the Brazilian Sugarcane and Bioenergy Industry Association (UNICA), although sugarcane production increased by about 4% YoY between April-July, sugar production volume fell by more than 12% during that period, while ethanol production rose by more than 20%. Of course, as sugar prices rise, these ratios may change, since what matters to the producer is the profit they can make.
Another important factor driving up prices in the sugar market in recent weeks has been the relatively weak Indian monsoon weather. Since early June, rainfall in India has been about 13–14% below the long-term average, which could reduce crop yields. It is important to note that India is the world’s second-largest sugar producer after Brazil, so it plays a key role in the sugar market. The El Nino weather phenomenon, which is expected to intensify in the coming months, could cause even more production problems, although it is difficult to assess the net effects.
Finally, another piece of positive news for the sugar market in recent days was that India authorized the duty-free import of 1 million tons of raw sugar to reduce high domestic prices (the country is also the world’s largest sugar consumer). According to a Reuters report, there have been no similar imports for nearly a decade. This move has moderated local prices, but at the same time has pushed up international prices.
There was no company-specific news regarding Südzucker since we sent our Trading Idea in July, so the stock price has been driven upward primarily by rising sugar prices. During yesterday’s trading, the stock price reached our previously set target price of 12.9 euros, so it may be worth realizing the 15% profit achieved in 1.5 months. While we are closing our Trading Idea, we are still keeping Südzucker’s shares on our Equity Top Pick List.
Südzucker technical picture
The stock from a technical point of view has reached its previous highs, so it has become quite overbought in the short term. A minor correction may be on the horizon, so a retest of the 12.1 level is possible, but the overall trend remains upward. The trend line runs around 11.3 and a break below this level would result in a change in structure.
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