In the German retail trade, the price for a kilo of sugar has fallen by almost 60 cents to 83.60 cents per kilo.
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A pound of sugar currently costs around 20 US cents (16.80 cents) on world markets, down from up to 25 cents (21 cents) at the beginning of the year. At its lowest point a few weeks ago, the price of sugar temporarily slipped to just over 17 cents (14.30 cents), the lowest level since October 2022.
Good harvest prospects
There is a very simple explanation for the current decline in the world market price for sugar: on the one hand, the reduced energy costs are easing production costs, and on the other hand, record harvests are emerging in important producing countries. “The fall in energy prices makes an important input factor in sugar production cheaper,” explains Santosh Brivio, economist at Migros Bank, in an interview with the AWP news agency.
The good harvest prospects in countries such as Brazil, Thailand and India are also contributing to falling sugar prices. “Important sugar producers are expecting a good harvest or even a record harvest,” said the Migros Bank economist.
Good US harvest
Finally, there is also euphoria about the harvest prospects in the USA. According to the latest report from the US Department of Agriculture, crops in the Midwest of the USA have an above-average sugar content in beets (16 percent instead of the usual around 14 percent).
Carsten Fritsche from Commerzbank made a similar statement in a recent comment. “The sugar cane harvest in Brazil this year is expected to be around 4 million tons higher than previously expected at 698.8 million tons.” However, he also caveats: This will not necessarily be reflected in a correspondingly higher sugar production. Because it is also very attractive for sugar factories to produce ethanol.
Prices in Germany are falling
Despite this one limiting factor, consumers in many countries are currently also benefiting from falling sugar prices. In Germany there was a fall in prices in stores.
According to a report by the DPA news agency, German discounters such as Aldi Nord and Aldi Süd as well as supermarket chains such as Edeka and Netto have increased the price for a kilogram of sugar from their own brands from 1.49 euros (1.40 Fr.) to 89 cents (83.60 Rp. ) reduced. Other large German retail chains such as Kaufland, Lidl, Rewe and Penny have also significantly reduced their sugar prices.
This means that the price is almost at the same level as at the beginning of 2022. In January 2022, the shelf price for sugar from German retailers’ own brands was still 79 cents (74.20 cents) per kilogram. In December of the same year it had climbed to 1.49 euros.
Prices depend on purchase costs
In Switzerland, store prices have not fallen. Coop and Aldi Suisse, for example, are currently keeping their sales prices for sugar stable. «Our prices are based primarily on the purchase costs. If price reductions are possible, we will of course pass them on to our consumers,” explained a Coop spokesman when asked by AWP.
Aldi says it will pass on cost advantages – if they arise – to customers. Lidl Switzerland and Denner also say this upon request. At Volg, prices are expected to fall somewhat soon. Migros is keeping a low profile. The orange giant does not want to comment on its pricing when asked.
Guide prices for sugar
But why are prices in Switzerland not falling in line with the global market? This is because around two thirds of the sugar used in this country is produced domestically. And for this sugar, the Sugar Interprofession – which consists of various players in the industry such as sugar beet growers or sugar manufacturers – sets a target price.
Most market participants then adhere to this industry agreement. For the current year 2024, the target price is 61 francs per ton of sugar beet, and this should remain this way in 2025 according to an agreement that has already been reached.
Weather can be stressful at any time
But back from little Switzerland to the global markets. It is unclear whether prices there will remain so low in the next few months.
Migros Bank economist Brivio, for example, warns that weather and climate could put a strain on supply at any time in the short term: “Sugar beets need dry conditions to concentrate the sugar content. Heavy rainfall leading up to the harvest could therefore affect production at any time.
