Sugar prices in Europe are stabilising, but sugar imports are not weakening and have almost doubled compared to last season. This confirms that the availability of sugar in Europe is under pressure. There are also global concerns about the availability of sugar, despite a good sugar cane harvest in Brazil.
In the European Commission's monthly report on Europe's sugar market, figures confirm this season's shortage. As in previous months, more sugar was imported and less exported than in other years. In May, 231 tons of sugar were imported and in June the import is already at 120 tons. This brings total sugar imports to 2,03 million tons of sugar, measured up to June 21. Compared to last season (2021/22), this is almost double (when the counter was 1,05 million tons). Sugar exports stand at only 0,4 million tons and are more than 40% behind the 2021/22 season. The import volume is expected to remain high in the coming months, causing sugar imports for the 2022/23 season - which runs until September - to approach 3 million tons.
Stabilize sugar prices
Sugar quotations have risen sharply on both the futures markets and the European spot market, but are now stabilizing. Stabilization has been going on for some time, especially in the European spot market. According to figures from the European Commission, the average sugar price in Europe amounts to €814 per tonne in May, €2 higher than April. Depending on the availability of sugar in the region, the price may vary, with prices in Southern Europe (region 3) having increased again compared to April, reaching an average of €903 per tonne. In region 2 (the major production countries) this is an average of €800 per tonne and region 1 (Northern Europe) €809 per tonne. Prices in these regions have hardly changed or have increased slightly in recent months.
Global sugar market
At the global level, Brazil is currently easing global concerns about sugar availability. The sugar futures markets in London and New York also responded to this at the end of June with a sharp loss of almost 15%. The futures market has partly corrected from this loss, but the news surrounding the Brazilian sugar cane harvest continues to depress prices. The harvest is going very smoothly with above-average yields and good exports. Unica, the Brazilian sugar industry group, reported on Tuesday afternoon, July 11, that sugar production in the second half of June was 7,6% higher than a month earlier. Previous months were also higher than other seasons.
In the long term, concerns about the availability of sugar persist. Although Brazil has a good harvest, much will depend on other major producers such as India. India, which caused a significant gap in global sugar supplies last season, limited sugar exports to 6,1 million tonnes due to disappointing sugar cane yields. This growing season too, there has been drought in important growing areas in India so far, which could have a negative impact on sugar production and therefore exports. The weather phenomenon El Niño may also have an effect on sugar production in the long term, although it is not yet possible to say to what extent this will be.
A lot of sugar will also be imported into Europe next season. The European Commission expects a production of 2023 million tons of sugar for the 24/15,52 season, 500.000 tons more than in 2022/23.
Futures market is recovering
The London white sugar contract has risen slightly recently despite price-pressing news from Brazil, opening at $11 per tonne on Tuesday morning (July 661). The raw sugar contract in London was virtually flat last week, opening at $515 per tonne. Both have therefore partly recovered from the free fall at the end of June due to the good Brazilian sugar cane harvest and the expiry of the July contract.