Photo by Alexander Grey on Unsplash
 

In nearly every agricultural commodity group we contemplate similar situations: tight supplies, growing demand, and smaller crops on the back of fewer productive acreage. Raw can sugar isn’t an exception to this universal story.

Front-month raw sugar futures on ICE (SBc1) hit a fresh 6-year high on Tuesday ahead of their expiration, as near-term supplies continued to tighten, though dealers widely expect the situation to ease going forward.

The market structure points to tight near-term supplies. May white sugar (LSUc1) fell $8.90, or 1.6%, to $562.40 a tonne.

Notwithstanding, sugar production in Center-South Brazil is forecast to rise by 13% to 38 million tons in this, 2023/24, season. Brazilian producer Raizen SA expects 48% of the cane sugar crop in the Central-South region to be used to produce sugar in the upcoming 2023/24 season.

The forecast was slightly above a median consensus forecast of 46%. Thailand, another leading global sugar producer, and exporter, was forecast to increase sugar production from a year earlier. But after the previous year’s devastating crop, the current production outlook was viewed more as a bounce back rather than a trend upward.

Elsewhere, adding to the strain on current global supplies was the nearly one-million-ton shortage in sugar production from the European Union, the world’s largest supplier of beet sugar, the French sugar beet crop area is set to fall to a 14-year low this year despite high prices, with farmers deterred by potential crop damage because of pesticide restrictions.

Another impact on the global sugar outlook was the late January ransomware attack on the Dublin-based ION Cleared Derivatives digital trading platform, which occurred while the New York No. 11 world raw sugar futures were rallying to 7-year highs.
 

Summary of forecast:

Commodities analysts expect sugar prices to remain elevated, although not necessarily at current six- or seven-year highs. The crop in India, the world’s second-highest sugar-producing country behind Brazil, is expected to fall short of earlier 2022-23 production forecasts. Several other major producers, except for Thailand, also were projected to have lower YoY production levels. Although consumption of sugar is slightly moderating worldwide on account of the popularity of a sugarless diet and the emergence of various sugar substitutes, it remains an essential ubiquitous food ingredient, and it’s growing shortage, along with general food inflation trends, suggest prices remain in the bullish trajectory.

More By This Author:

Live Cattle: Covid Shortage Became Deep-Rooted
Rice Price Mostly Recuperates Across The Varieties Group
Orange Juice Concentrate: New Kid On The Block Of The Insurgents