Sugar prices on the futures markets have found their way back up. This is mainly due to developments in Asia. Opinions are divided in Europe about the increased sugar imports from Ukraine. This also leads to less sugar purchases from developing countries, which face competition from Ukrainian sugar.
Sugar suppliers from Africa, the Caribbean and the Pacific are calling for sugar flows from Ukraine to Europe to be restricted due to market disruption. The committee of sugar users in turn defends the import because of the structural sugar shortage in the EU. Quotes are on the rise again on the global sugar market.
The umbrella organization of sugar suppliers from Africa, the Caribbean, but also around the Pacific (such as the Fiji Islands and Papua New Guinea) is calling on the European Union and Ukrainian regulators to limit the flow of sugar from Ukraine to Europe. They indicate that this is disrupting the EU market and disrupting supplies from developing countries under partner agreements such as the Everything but Arms initiative (EBA).
In addition to Brazil, these countries normally supply a large part of the European and British markets with sugar. Due to the sharp increase in sugar imports from Ukraine, these countries can export less to Europe and competition arises. Ukrainian sugar imports have increased by twenty times to 2022 tons since June 412.900. These volumes may increase further in the coming months because Ukraine has significantly expanded its sugar beet cultivation, resulting in higher sugar production. Ukrainian growers have increased their focus on cultivation due to higher profitability.
Shortage remains despite growing imports
Due to the large quantities of sugar from Ukraine, countries covered by the EBA initiative and other economic agreements are seeing their own export volumes decline. This disrupts income for these countries. European food and beverage companies, in turn, are defending sugar imports from Ukraine, given the EU's structural sugar shortage and the sky-high prices currently prevailing. “Even with the large increase in sugar imports from Ukraine, there is still a shortage of supply of the sweetener for the industry of confectionery and other products in the EU.” This is stated by the Committee of European Sugar Consumers (CIUS). This represents approximately 70% of the annual sugar production in Europe.
Sugar quotations are on the rise again
Sugar has been on the rise again on the global market since the new year, after a previous sharp price drop at the end of 2023. This trend is mainly due to disappointing yields due to drought in Asia, which the global sugar market is now focusing more on. Australia also expects lower sugar production. In recent months, it was mainly Brazil that continued to amaze with impressive sugar productions, but the processing season there is now over. This does not mean that Brazil's role in the sugar market has ended. On the contrary, as above-average sugar export volumes will continue to reach the world in the coming months.
Recent figures from the Indian Sugar Mills Federation (ISMA) report that total sugar production is 14,9 million tonnes. That is 7% lower compared to the same period a year ago. In percentage terms, this may not be too bad, but last year too, sugar production was already exceptionally low, resulting in an export quota of around 6 million tons of sugar. To this day, the export ban still applies, which means that India does not export sugar.
The developments in Asia due to drought are reflected in the sugar futures markets. Both the white sugar contract in London and the raw sugar contract in New York have risen further in recent days. In addition, the stock exchange in London has already left the limit of $600 per tonne behind. At the time of writing (Tuesday afternoon, January 23), the quotation stands at $665 per tonne.
Mexico is also suffering from drought, reports the leading sugar trade group Czarnikow. According to new estimates, it expects Mexican sugar production to fall to 2023 million tons of sugar in 24/4,7. This is the lowest level in ten years. This is also considerably lower than the US Department of Agriculture's (USDA) estimate of 5 million tonnes.