‘Grim’ global sugar outlook results in soaring prices

17 April 2023

UK sugar manufacturer British Sugar said it will pay farmers premium prices to harvest their sugar early this year in response to poor harvests.

Fears over tight sugar supplies have resulted in the price of raw sugar to soar over the past month, reaching its highest rates in a decade. 

Sugar prices have surged 22% so far this year, as adverse weather conditions during 2022’s growing season have impacted crops across Europe.

British Sugar, the sole British producer of sugar, said it is offering sugar beet growers higher prices to harvest some crops early for next season, in a move indicating worries supplies will be tight later this year. 

It further said it had “optimised” its manufacturing process, and it is looking at the possibility of using alternative sources for crops from across the world in order to “co-refine” them with UK beets.

The National Farmers Union told Supply Management the move by British Sugar was “unique”. 

A spokesperson said: “In 2022 we had a really poor harvest, thanks to freeze-thaw conditions in the winter as well as drought earlier last year. This one-off contract covers growers’ risk of lower yield. The idea is to get a bit of sugar production going earlier, to reduce the risk of tight supplies. 

“The European market, the world market is in a tight position right now. The supply-demand balance means there’s not a lot of availability, so sugar prices across Europe are very high right now. It makes sense to incentivise growers to plant a bit more, instead of just trying to purchase more sugar from a tight market. Part of it is just the commodity cycle itself being a factor.”

India announced it will not be expanding its sugar exports, while Pakistan, Thailand, China and Mexico also announced they had produced lower volumes of sugar than had been expected. 

While Brazil’s harvest in the coming months is expected to be strong, logistical hurdles owing to higher exports of soybean and corn could restrict supplies over the coming months.

The move comes alongside a “grim macroeconomic environment” for the commodity,, Mintec Global commodity analyst Andrew Woods told Supply Management.

“Egypt announced that it would ban exports of white sugar which, added to the export ban in Algeria, reduced export availability from the Dubai refinery. 

“The sugar market is relying on Brazil to begin its new campaign in April without inclement weather disrupting either inland or port logistics. Despite grim macroeconomic prospects, the sugar market seems set to take its cue from the weather in Brazil.

“The global outlook remains tighter for sugar supplies and possibly, if some of the more pessimistic scenarios come to pass, we could see a deficit of supply over demand in 2023/24.”

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