The worldwide sugar yields determine the price of the sugar quotation at the moment, which may be even less than previously expected. In addition, the shortage of diesel led to problems in European sugar production.
The white sugar listing is recovering due to lower expected yields and the unavailability of sugar production in certain parts of the world. In mid-September, the price shot down after hitting a new all-time high at $622 per tonne of white sugar on the Liffe futures market. The quote fell sharply towards $500 a ton and stabilized above $550 a ton this week. On Wednesday, October 12, the futures market traded $560 on the board again, and the quote continues to move upwards.
in Europe it is becoming increasingly clear that sugar production this year may turn out to be lower than previously thought. The European Commission expects only 15,5 million tons of sugar production for the 2022/23 season, which means that more sugar will have to be imported again. Especially considering the current stocks after this season, which amount to only 1,3 million tons. That level is low, but not alarming, the committee reports.
Sugar production in India postponed
Sugar production in India, the largest sugar producer and the second largest sugar exporter in the world, does not yet want to go off the rails. Heavy rainfall throws a spanner in the works for Indian sugar mills. Sugar production is expected to have slowed down by at least two weeks, Reuters said. Also, the Indian government still does not allow the export of sugar from the country. That while sugar traders have already signed several contracts for deliveries in November and December. That drives up the global sugar price.
Brazil sees sugar harvest shrinking
At the largest sugar exporter, Brazil, the sugar cane yields are also more disappointing than previously expected. Here too, the weather conditions have a negative effect on the expected production of sugar, reports UNICA, the sugar industry association of Brazil. An example is the sugar production in the mid-south region of Brazil, the region where the most sugar cane grows, in the first 15 days of September. Due to weather conditions, sugar production there is 29% lower compared to the same period last year. This creates more unrest about the total availability of sugar in the world. Earlier this year, record sugar production seemed to be easily achievable, but due to the lower results, that expectation is no longer so certain. The record yield that was previously predicted for Brazil seems to be gone.
Fuel shortage
European sugar producers are major energy users and are under pressure from current energy prices. This has led to measures and production adjustments among the producers. One of those changes is the switch to the use of more diesel, of which the supply is becoming smaller and smaller. Within Europe, the already tight diesel market is further disrupted by strikes in France at Total Energies.
That caused problems last week at sugar producer Tereos, which no longer received diesel from Total. The company had to adjust the production planning accordingly. The other major sugar producer, Cristal Union, said it had drawn on its own fuel supplies to maintain production. However, this only happens in emergencies. Meanwhile, the French government has released its own strategic fuel reserves for sugar producers, so that the sugar campaign is not delayed.
The beet harvest itself – which is proceeding smoothly – also received negative news this week. The French Ministry of Agriculture and Food estimates the beet harvest again lower than previously expected. This is now 10,4% below the 5-year average and, in addition to hectare yield, is also due to a shrinking acreage.