European sugar prices – which have been on the rise since the end of last year – continue to rise. This summer, the average selling price was more than €80 per tonne above the level of a year ago. A low exchange rate of the euro versus the dollar and real ensures that European sugar is attractively priced.
In August this year, the average European selling price for sugar was €484 per tonne (range of €445 to €523 per tonne). That is an increase of €83 compared to August last year. As usual, there are large differences per region. In areas with a sugar shortage, an average of €632 per tonne was paid. Countries with a trade surplus, including the Netherlands, Germany and France, achieved an average price of €462. Sugar supplied on short-term contracts is priced slightly higher. The average price level here was €544 per tonne. That is €90 more than in the same month last year.
A fall in the exchange rate of the euro compared to mainly the US dollar and real makes sugar from the EU more attractive to buy on the world market. The Brussels sugar consultation at the end of September states that global demand for sugar is likely to increase further in the coming months. That could drive prices up further. This is also necessary to cover the higher production costs - especially due to energy requirements.
Production shortage
The International Sugar Organization (ISO) previously assumed a production surplus for the 2021/22 season. This has now been adjusted to a shortage of 1,3 million tons in the world. Global consumption is higher than production due to good demand and a higher blending rate of ethanol in fuels. More ethanol is added to expensive gasoline than if the fuel is more attractively priced. This plays a role in Brazil and India, among others. It also means that more cane sugar becomes available for consumption, which would otherwise go into industrial processing.
For the current 2022/23 season, the ISO assumes a production of 181,9 million tons. That is 7,8 million tons more than in the previous season. This creates a surplus of 5,6 million tons. Consumption increases by almost a million tons, which is not enough. The global final stock thus grows by 3,2 million tons. Brazil in particular is harvesting more sugar this season, the idea is, with an increase in production of more than 5 million tons. The EU expects to harvest 1 million tons less sugar. Rain that fell this autumn came too late for most beet crops, although a positive trend is noticeable in the Netherlands.
During the 2021/22 season, the EU exported a total of 790.000 tonnes of sugar compared to 770.000 tonnes in the previous season. At the same time, 1,435 million tons were imported. That's 70.000 tons more.
Price dip on futures market
The international sugar futures market was quite busy in mid-September price drop to see. The price has now stabilized and is looking for a new balance. At the end of September, the world market price for white sugar was $534 per tonne and $405 for raw sugar. Despite this recent dip, sugar prices - both on the futures market and the European market - have continued to rise in recent months.