The problems surrounding the persistently high demand for sugar and the Brazilian sugar cane harvest are keeping the global sugar market in its grip. Both prices in Europe and on the futures market remain high. The futures market has looked a bit more unstable in recent weeks. The beet campaign is a little more difficult due to the weather, but the sugar content has increased.
The European sugar beet harvest is on average much higher than last year due to the higher root yields. Due to the drought and heat, Europe had to import a significant additional volume of the sweetener to meet demand. The 30/2022 season ended last September 23, bringing imports to 2,6 million tons of sugar, the European Commission (EC) reports. That is 1,1 million tons more than the previous season. In addition, Europe also exported less sugar.
Stable price
In 2023/24, the EC expects higher sugar production thanks to better beet yields. With the expected 15,6 million tons of sugar, production is more than 1,1 million tons higher than last season. It became clear early on that the beet yield would be higher. The EC already made this estimate last summer, but it has not led to price pressure, according to recent figures from the EC's monthly sugar report. Consumption is around 17 million tons and an above-average amount will have to be imported from outside Europe next year to meet demand. The average sales price for white sugar in Europe stood at €820 per tonne, slightly higher than a month earlier. This makes the sugar price very stable. The price has been over €2023 per tonne since the spring of 800. The price of short-term contracts has fallen slightly and was €938 per tonne in July.
Prices also remain high on sugar quotations, although the futures markets in London and New York are experiencing an unstable period. For example, the white sugar contract in London in September reached a 760-year high of more than $12 per tonne. The price then fell smoothly to well below the $700 mark, before yo-yoing up and down. In particular, a tight supply of the sweetener on the world market and good sugar cane yields in Brazil are causing price pressure. The contract in New York showed a similar pattern. Today (Tuesday, October 31) the contract opened at $727 per tonne.
The world's largest sugar producer and exporter Brazil is having a bumper harvest this year and is heading for record production. However, sugar production in other parts of the world is disappointing, especially in some Asian countries. In addition, consumption is increasing every year. Brazil is therefore unable to meet the high demand for the sweetener, causing concerns about the tight supply to persist. Two weeks ago, India once again confirmed their poor sugar cane harvest by extending the sugar export ban until November. It wants to wait for the results of the first production, which officially started in October, to make a better estimate of how much sugar they can extract this season. Several analysts expect production to be far below average and the country will have no choice but to limit exports. Even though additional supply is needed.
Sugar content increases
The beet campaign in the Netherlands is now well underway after a false start at the factories. The sugar content was disappointing due to the course of the season, but has already increased somewhat compared to the start. In the first week of the campaign, the average sugar content was 15% and in the third week of October this percentage was 15,9%, according to Cosun figures. The northern and eastern areas of the Netherlands have the highest sugar content of over 16% on average.
According to the beet processor, the tare percentage has increased this week from 8,3% to 10%. In the coming weeks, that percentage may increase further given the weather conditions. The recoverability index is 90% and has also increased slightly in recent weeks.