A sharp slowdown in Brazilian sugar exports is keeping the price of white sugar near a XNUMX-year high. In addition, concerns about the availability of the sweetener are increasing in Asian countries. In Western Europe, persistent rainfall is delaying the beet harvest and processing at French sugar factories is at a slower pace due to lower supplies.
The quotation of the white sugar contract in London has increased steadily since the beginning of October and has been hovering around the highest point in more than twelve years since November. At the time of writing (Tuesday, November 14), the contract stands at $758 per tonne. Concerns about the global availability of sugar persist and several trade organizations and sugar production groups estimate global sugar production to be lower than consumption. While stocks have decreased in recent years. Production is disappointing on several continents. Brazil, on the other hand, may produce and export a record amount of sugar, but logistical problems do not make the latter possible.
Brazilian sugar production has been very smooth and with high yields in recent months, putting production on track to break the record of the 2020/21 season. Until the end of October, production was 37,2 million tons of sugar according to Rabobank figures, making production above average. This also means that more can be exported, especially with the current demand for sugar. However, there is a significant hitch. Waiting times in several major ports have increased considerably, ranging from a week to more than a month and a half, according to the international shipping company Williams Shipping. Reuters news agency reports that the infrastructure is being used to its maximum potential, but that in addition to sugar, the very large soy and corn crops are currently being exported. These export products are also heading for record quantities due to a good harvest. This results in large stocks of sugar in the country. However, this only lasts for a limited time and this sugar will eventually come onto the market.
Export Restrictions
Meanwhile, in India, one of the world's largest sugar producers, the cane sugar processing season has begun. According to the Indian Sugar Mill Association (ISMA), cane yields are significantly lower than in previous years due to drought in the important growing regions of Maharashtra and Karnataka, the result of the El Niño weather phenomenon.
To protect the domestic market, the Indian government announced in October an extension of export restrictions indefinitely. Last year, the Asian country introduced a restriction on sugar exports after setting a quota at 6,1 million tons. The government indicated at the end of October that it would only set new quotas when it has a better idea of the country's total sugar production. Given the expected cane yields, the volume of sugar intended for export this season will be minimal or possibly even zero. Thailand, which completes the top 3 sugar exporters in the world, has also been hit hard by drought in recent months, meaning exports will be below average.
Floods France
In Western Europe, the heavy rainfall has an impact on the progress of the beet harvest. Sugar producer Cosun reported earlier this month that the campaign is continuing despite the many millimeters. The plans for purchasing beets have been considerably adjusted because in certain cases it was not possible to harvest the plots due to the wetness. In some areas the purchase of beets is quite disappointing, but the factories are still supplied with enough beets to be able to produce. However, the tare percentage is increasing. This averaged 12,1% in the first week of November, compared to 8,6% in the first campaign week. The sugar content remains the same due to the dark weather and has hardly increased for several weeks and stands at 15,8%.
In France, the precipitation does lead to a significantly lower beet purchase and even to a production delay, the French sugar processor Tereos reported. Half of the sugar factories have been forced to cut production capacity because sugar beet growers are simply unable to harvest as much due to the heavy rain. The sugar factories in the north in particular have fewer beets to process and a lot of rainfall has fallen there in recent weeks. The weather has been bad again in recent days and several northern regions, such as the Calais department, were hit by flooding.