Sugar quote reaches highest point in 10 years

Since the summer of 2020, the sugar price on the Liffe has been slowly but surely rising, but since Russia invaded Ukraine, the sugar price has been more unstable than ever. Significant peaks were achieved, such as last summer in mid-July, when the sugar quotation just barely exceeded the €600 limit, before falling to €500 per tonne. In recent times, the listing finally seemed to be in calmer waters, but that turned out to be the calm before the storm. At the beginning of September the quotation was still €570 and within a few days it rose sharply. There are several factors that influence the quotation and resulted in the highest point of €12 per ton of sugar being reached on September 614. That day the price fluctuated considerably and yesterday, September 14, it closed at €604,80 for the September contract.

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Tight sugar supplies and drought
Significant rises and falls on the futures market are often the result of major decisions or news, but now the sugar market is being pushed upwards by several reasons. In particular, tighter sugar supplies in various importing countries are pushing up prices, sugar traders report to the Reuters news agency. While sugar exports in India seemed to be finding it difficult to get going because there are no guidelines yet for the new export season - which starts on October 1. The decision has now been made and the Indian government has officially decided this week that 5 million tons of sugar may first be exported and possibly another 3 or 5 million tons later in the new season. Contracts can therefore be signed so that exports can start in the new season. The expectation is that the world's largest sugar producer will achieve a record sugar yield this season, but will yield minimal amounts on the global market.

And while the sugar refineries in India are starting up, many sugar factories in Europe are also continuing to operate. Last Tuesday, September 13, the Cosun Beet Company factories started again and the first sugar beets are also being processed in Germany, France and Poland. All sugar producers are now investigating options to save energy costs. That also raises the sugar price again. In addition, there are concerns about European sugar production, although the reports are sometimes diametrically opposed. For example, despite the drought, yields in Western Europe are not disappointing everywhere and the sugar percentage is higher than average due to the many hours of sunshine. In the Netherlands, Cosun Beet Company reported that sugar production is estimated to be 6% higher than the five-year average. This is also the case in France, where the French Ministry of Agriculture announced on September 13 that the 2022 harvest will contain an estimated 33,33 million tons. That figure is just above the five-year average. These are and remain estimates and the yields vary considerably per area. In addition, everything still has to be harvested and the beet campaigns have only just started.

Several European sugar factories have already increased payments during the growing season. Some even several times. Nordzucker Poland has also increased the price by €6 per tonne. Polish beet growers now arrive at a price of €40 per ton of sugar beet.

Declining listing expected
The price has now dropped slightly but is still above the €600 limit. However, the latest reports seem to put pressure on the listing. For example, Brazil, the second largest sugar producer in the world, has again reduced its fuel tax. As a result, profit margins from bioethanol are shrinking, which in turn leads sugar cane processors to avoid biofuel and focus more on making sugar. In addition, the latest figures show that Brazilian sugar production has already increased by 5,7% in the second half of August. In addition, the export contracts from India can finally be signed, which also removes pressure and concerns.