The sugar market remains in the grip of a global sugar shortage and at the same time above-average sugar production in Brazil. These outweigh each other, resulting in a reasonably stable course. In the meantime, the beet harvest in Western Europe continues to be difficult and now frost is also making an appearance.
In contrast to recent months, sugar prices in London have remained fairly stable since November. Quotations have typically fluctuated between $730 and $760 per tonne, a narrower range than previous months. It seems that the sugar market needs a new impetus to change course. Concerns about a global sugar shortage persist due to lower production in Asia, Europe, but also Mexico, for example. In the meantime, Brazil is calming the sugar market with above-average sugar production, but is unable to convert this into a falling price. At the time of writing (Tuesday afternoon, November 28), the white sugar contract in London is at $738 per tonne.
Logistical problems in sugar exports continue to persist in Brazil. As in recent weeks, sugar stocks continue to increase in the sugar cane mills and export ports. As a result, the above-average sugar production cannot reach the world market and, according to commodity analysts, that is also one of the reasons why the sugar price is not falling. The delays for freighters have remained almost the same as a few weeks ago. They are held up by lack of space in the terminals. Grain transport is also running at full speed. The logistical problems are expected to last until the new harvest in Brazil, which will start again approximately in March 2024. Even then, the logistics bottleneck will again cause disruptions in sugar exports. As it now appears, even greater sugar production than the current one is expected in Brazil next season. This is due to area expansion due to higher sugar prices, but also favorable growing conditions and therefore higher yields. As the world's largest sugar exporter, Brazil plays a major role in determining the global sugar price.
Difficult beet harvest
Meanwhile, the beet harvest continues to be difficult in Western Europe due to the heavy rainfall. The first frost of the year is also a fact and delays the beet harvest. This results in less supply, such as several sugar factories in France that have not been operating at full capacity since the beginning of this month. It is also quite a challenge for the Belgian Tiense Suiker to have sufficient supply of beets due to the wet weather according to Belgian media.
In addition, the sugar content is disappointing due to the dark weather. The sugar content has hardly improved since the end of October and for this reason the German Sugar Industry Association (WVZ) has already lowered the production forecast by 2% to 4,2 million tons of sugar. In addition to precipitation, it is mainly frost that will hinder the German harvest in the coming period, according to the forecasts. The Dutch Cosun also confirms that the sugar content has hardly changed. In the weekly figures, the average sugar content has only increased by 0,1% since mid-October. The average sugar content in the week to November 18 was 16,0%. The tare percentage has now increased to 12,3% in the same week.
Cosun does not report any delays due to precipitation. In fact, in its most recent reporting, the cooperative reports that the factories are running at full capacity with an average of 58.000 tons per day. Stocks are lower due to a delay in beet harvesting due to the wet weather. In addition, planning is quite a challenge for Cosun and the contractors. In some regions the harvest occasionally came to a standstill, but as soon as the wind persisted and it became dry for a while, harvesting could resume under reasonable conditions. Especially in the north, quite a few beets have already been grown. In the southwest, but also in the province of North Holland, it has been very disappointing in recent weeks. The campaign is expected to end two weeks later. She mainly attributes this to higher root yields. However, the factories also had start-up problems at the beginning of the season.
Russia harvests more sugar beets
Sugar production in Russia is expected to be at its highest point in four years this season. Sugar trade group Czarnikow reports this in an analysis. Thanks to above-average carrot yields, sugar production is expected to reach 6,5 million tons. Last year that was 6,2 million tons. Russian consumption is 5,8 million tons and the surplus is usually exported to Central Asia. According to Czarnikow, Russia is filling the gap in sugar exports that India and Pakistan are leaving behind due to the export restrictions they have introduced.