Sugar continues to become more expensive in the New York and London markets. A change in Brazilian fuel taxes and a disappointing sugar cane harvest in Asia, among other things, are driving up prices.
Vfor white sugar, the price on the London futures market is around USD 630 per tonne. That is the highest price in the last 10 years. Raw sugar in New York is at its highest level in 6 years at about $0.22 per pound.
Tighter world supplies
Brazil is the largest sugar producer in the world. There, the heavy rainfall delayed the harvest. In addition, a change in Brazilian fuel taxes, among other things, is unsettling the markets. This could make it more interesting for some sugar mills in Brazil, the largest exporter of raw sugar, to use the sweetener for ethanol production instead of export. Belgium reports this.
Most of the world’s sugar comes from sugar cane, which is grown in large quantities in India and Thailand, among others. However, the harvest in India was disappointing due to the heavy rainfall. Prime Minister Narendra Modi also has the ambition to use the sugar cane to make ethanol, with the aim of reducing oil imports, among other things. There was also a disappointing harvest in Thailand.
In addition, there are concerns about a possible return of El Niño in the second half of 2023, with adverse weather conditions for sugar cane. This could lead to further tightness in the market.
Just news for food inflation
Economic adviser Francis Huyghe gives in The standard note that there is almost always a shortage of sugar in the world. In practice, he sees a direct link between the oil price and the sugar price. He also sees these high prices as negative for food inflation. In The standard it is said that the prices of chocolate and candy are more expensive for Easter than a year ago. “The consumer will notice, but with a delay. The consumer will see the effect of the more expensive sugar price on the shop shelves. That can take up to 6 months.”
