By John Kyule, Kenya Sugar Board
Supply Squeeze Intensifies, Prices Surge Further
The Kenya Sugar Board’s May 2025 Sugar Market Newsletter arrives at a time when the industry is under growing pressure from sustained production declines and escalating market prices. Covering January through May, this edition offers a crucial comparative look at how the sector is adjusting as the lean season deepens.
Production Continues Downward Trend
For the third consecutive month, both sugarcane milling and sugar production fell. The total cane milled in May dropped a further 4% from April’s already reduced levels, marking an almost 50% plunge since March. Most mills reported lower throughput, with only Transmara, West Valley, and Busia bucking the trend, while several major mills remained closed.
Sugar output echoed this contraction, falling by 8% from April. The industry’s cane-to-sugar ratio worsened, highlighting deteriorating efficiency and strained supply. Bagged sugar production was down 9%, while miller sales slumped by 26%, signalling tight market availability despite still-strong demand. As a result, factory closing stocks rebounded by 23%—suggesting sugar was becoming less available for immediate sale.
Molasses and By-Product Markets Falter
Molasses production also continued its decline, down 15% from April, and sales suffered a sharp 60% drop. Still, closing molasses stocks increased, reflecting a slowdown in offtake as market conditions shifted. Notably, Kenya imported small amounts of molasses from Uganda, while exports remained at zero for the third consecutive month.
Market Prices Jump to New Highs
May’s constrained supply environment triggered further price escalation:
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Sugarcane prices were revised upward late in the month, from Ksh 5,300 to Ksh 5,500 per tonne, in response to ongoing supply shortages.
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Ex-factory sugar prices soared by 9% to Ksh 7,381 per 50kg bag.
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Wholesale sugar prices leaped 10% to an average of Ksh 7,986 per 50kg bag—the sharpest monthly jump this year.
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Retail sugar prices also surged, hitting an average of Ksh 172 per kilo (up 8% from April).
Imports Expand as Domestic Supply Falters
With local output constrained, Kenya’s reliance on sugar imports continued to grow. May saw imports climb to 53,447 MT (up from 45,090 MT in April), with both white refined and mill brown sugars sourced from a widening list of suppliers. Import prices (CIF values) remained high, reflecting global market tightness.
Global Markets and Outlook
The world sugar market mirrored these pressures, with the average ISA Daily Raw Sugar Price falling slightly but still signaling an environment of tight supply. The global context underscores the challenges facing Kenya as it seeks to stabilize prices and ensure sufficient supply.
In Summary
May 2025 was defined by intensifying supply shortages and relentless upward pressure on prices, pushing the industry and consumers alike into new territory. With imports and prices both rising, and production yet to rebound, all eyes are on how stakeholders will adapt through the mid-year period.
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