Stability has long been hard to find in sugar prices in New York and London. The excellent Brazilian sugar cane harvest, which is stringing together records, is making itself felt every week on the futures markets. Nevertheless, worldwide concerns about the availability of the sweetener persist. This also applies to Europe, although it is not so much due to the sugar beet yields per hectare. These have improved slightly over the past month.
In Europe, sugar beet cultivation got off to a false start due to a much later sowing on average. The wet, cold start was followed by a period of drought in several European areas. But recently the crop has developed strongly in various areas due to ample rainfall and moderate temperatures. A recovery is therefore visible on the European fields. In the August edition of the Europe Commission's Mars bulletin, the average hectare yield is 73,3 tonnes per hectare. This means that the yield is around the five-year average. The yield in the Netherlands in this edition is 82 tons, which is just below the five-year average. According to the crop monitor, sugar beets are in the best condition in eastern Europe. A more important aspect, however, is the sugar content, which is probably somewhat lower due to the current season.
Brazilian top harvest not sufficient
However, average yields have little effect on the European sugar market, let alone internationally. A shortage is certain for Europe in the 2023/2024 season, making imports the only solution to meet consumption. However, the sweetener is not a bargain on the international sugar market and that does not seem to be happening for the time being. Sugar traders and sugar companies have recently seen the global sugar shortage for the 2023/2024 season increasing and have made this known in their expectations. The reductions are mainly due to the consequences of the El Niño weather phenomenon in India and other Asian countries, where drought is hitting sugar cane cultivation. An example is Thailand, where the lowest sugar cane harvest in 10 years is expected by sugar trading company Czarnikow. In India, the world's second largest sugar producer, drought is also hampering sugar cane cultivation. The monsoon rains, which normally bring quite a few millimeters every year in these months, are drier than normal and are most likely the effect of El Niño.
Despite these expectations, sugar prices are not increasing further and this is mainly due to the heavy counterweight coming from Brazil. The world's largest sugar exporter is experiencing one of its best harvest years for sugar cane and has already broken several records, such as in the second half of July. Never before has so much sugar cane been processed as this two weeks, with 52,96 million tons. Sugar production also stood at 19,2 million tons until the end of July. It is not surprising that the Brazilian state-owned company Conab last week increased its forecast for the current season's sugar production to 40,9 million tons. This immediately became visible in the sugar quotations.
Sugar quotation yo-yo
As far as sugar quotations are concerned, there is little stability and it is a bit like a yo-yo. Price increases are followed in no time by a price drop, with $700 per tonne of white sugar appearing to be the ceiling on the London futures market for several weeks. In New York the quotation for raw sugar is somewhat lower, but the same pattern is visible here too. Last week, the sugar price in London climbed and remained above the level of $700 per ton for the first time in a long time, but after the news from Conab the price lost its previous gains. Just as it has been doing for several weeks, as soon as the above limit is reached.