![Sugar prices lowest in 3 years – what does the market have in store for the near future? [World News]](https://foodcom.pl/wp-content/uploads/2023/09/Foodcom_World_News_Additives-1520x760.jpg "Sugar prices lowest in 3 years – what does the market have in store for the near future? [World News]")
- Sugar prices on world markets recorded a significant drop on 21 January, but since then prices have started to rise again.
- Reasons for this included forecasts of higher sugar production, particularly from Brazil, where weather conditions are favourable for the crop.
- The price dynamics are also influenced by the lifting of the export ban in India, the potential for greater exports from Thailand and the expansion of EU trade opportunities with Ukraine.
Reasons for falling sugar prices
Last week, on 21 January, sugar prices fell to a three-year low. The reasons were the good weather in Brazil, an indicator of an abundant harvest, and India’s decision to export sugar. Today, however, sugar prices are rising again, reaching levels similar to those at the turn of the year.
Brazil has been experiencing abundant rainfall over the past four months, improving the harvest prospects of the sugar cane crop, which is expected to boost sugar production. If low prices for the commodity persist, however, most of the cane is likely to be processed into ethanol. In the 2024/25 season, not only Brazilian but also global sugar production is expected to increase, with a 1.5% increase over the previous season. Consumption will also increase by 1.2%, resulting in a 6.1% decrease in ending sugar stocks.
Export dynamics and impact on sugar prices
India is the world’s second largest sugar producer, but the country has been under an export ban for the past two years. There has been talk for weeks of a potential lifting of the ban, and last week India officially announced an export permit of 1 million tonnes of sugar by the end of September. The motivation is to support local sugar mills and domestic prices, which have recently come under severe pressure. Nevertheless, the decision has taken many traders by surprise, as India’s sugar production is said to be down from last year’s 32 million tonnes to 27 million tonnes, while domestic consumption is expected to reach 29 million tonnes. Despite the restoration of export opportunities, traders are holding off on concluding contracts, waiting for prices to rise.
Sugar prices are also under pressure from forecasts of increased sugar exports from Thailand after sugar syrup exports to China were suspended. Thailand’s sugar production, meanwhile, is expected to increase by around 18% this year compared to last year, reaching more than 10 million tonnes. Thailand is the world’s third largest producer and second largest exporter of sugar.
The situation regarding the supply of sugar to the European Union from Ukraine is also a factor affecting sugar prices – the EU has reintroduced tariffs on supplies, which are to remain in place until the beginning of June, so that sugar prices in Ukraine remain low despite the rise in the value of the dollar. Trade liberalisation agreements giving Ukrainian producers greater access to the European market from the beginning of January could also have a significant impact on sugar prices.
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