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Global sugar market report April 2024

04/04/2024 By Ben Eastick in News & updates Market news

As countries around the world continue to grapple with more extreme weather events due to climate change, we are seeing some dips in export production and more domestic support for farmers. Our latest sugar market report highlights what is happening globally in sugar, from changes in harvest yields to consumption.

Overview: what’s happening in the global sugar market?

Delays to interest rate cuts in the USA and Europe look set to continue into the summer. Sufficient crude oil stocks and a weak economy in China have calmed commodities markets despite ongoing geopolitical tensions with the Russia/Ukraine war, military action in Gaza and the Houthi attacks in the Red Sea diverting shipping vessels around the Cape of Good Hope. The outlook for the rest of 2024 will largely depend on election outcomes in over 70 countries this year, the situation in the Middle East, and China’s economic position.
The No.11 raw sugars futures are currently trading at 22.49 c/lb compared to the 11-year high of 27 c/lb a year ago and would require a poor Brazilian harvest in 24/25 to return sugar prices to 2023 levels.

El Niño began in June 2023, which brought warmer weather patterns, dry conditions to parts of Asia, West Africa and Australia, and heavy rainfall to Brazil and the USA. This is expected to continue until spring 2024. El Niño has impacted sugar production in India and Thailand, where unseasonal weather and a lack of rainfall has led to a reduced harvest. Despite an upturn at the tail end of the crushing season, there will likely be no sugar exports from India in 2024. This means that Brazil will be the major global supplier of sugar this year, with over 47% market share.  

Further dry weather is forecast for Brazil in the crucial period for cane development in the coming weeks. There is concern for the 24/25 crop and therefore global supply in 2025. For 23/24, we estimate an increase in global beet sugar production to around 41 million tonnes and an increase in global cane production to 153 million tonnes, resulting in total global sugar production reaching 194 million tonnes compared to 186 million tonnes in 22/23.

Global consumption will continue to rise to 189 million tonnes in 23/24 from 188 million tonnes in 22/23, leaving the world market with an estimated surplus of 5 million tonnes for 23/24.

High yields and oversupply in the EU beet sugar market  

Duty free imports of Ukrainian sugar will continue until 5 June 2024,when full duty will be imposed. The imports, estimated at 750,000 tonnes for 23/24, are having a considerable effect on oversupply in a market with lower demand and good existing stock levels, resulting in falling white sugar prices. If the current situation continues it is possible sugar beet factories will close, and growers will be forced to plant other crops.

Recent protests by French and German farmers are due to what they see as unfair competition from countries like Ukraine that are not subject to the same regulations as farmers in EU countries. The 23/24 sugar beet harvest in the EU, which began in early September, is now complete. After a delayed beet sowing last spring, rain during the summer and autumn resulted in high beet yields.

The campaign of lifting the beets saw yet more wet weather across northern Europe, followed by frost and mild weather at the end of the campaign. The sugar content of the beets was lower compared to this time last year, except in Poland, which has experienced a record crop. Overall estimates for EU beet sugar production for 23/24 is 16.4 million tonnes, compared with the 14.8 million tonnes produced in 22/23 and 17.0 million tonnes produced in 21/22. EU sugar consumption for 23/24 is expected to decrease by 100,000 tonnes to 17 million tonnes.

UK beet areas increase as Australian raw sugar imports continue

Despite a challenging sowing season due to heavy rain in March and April last year, the area under beet increased by 13% with the Department for Environment Food and Rural Affairs (Defra) allowing 60% of beet crops to be treated with neonicotinoid to protect against Virus Yellows.

Ideal growing conditions during the summer boosted the sugar content of the beets, followed by a dry autumn. An early start to the harvest in September to compensate for the 22/23 shortage saw rain return. Adverse rainy weather continued throughout the beet campaign. This made lifting the beets from the fields a greater challenge that delayed the back end of the harvest.

In December, the National Farmers Union (NFU) ended their protracted negotiations with British Sugar, which had started in May. The NFU, having been offered £38 per tonne for the beets, settled on a fixed price of £40 per tonne for the 23/24 crop. The beet lifting campaign ended in March, and it is estimated British Sugar will produce 1 million tonnes of beet sugar for 23/24.

The first shipment in 51 years of duty free Australian raw sugar arrived in the UK in July, removing the £350 per tonne of duty. A limited quota of 80,000 tonnes until October is allowed for 23/24, followed by 100,000 tonnes in 24/25, then increasing by 20,000 tonnes each year until 2031 when the tariff will be completely lifted. Currently, there is an allowance for 260,000 tonnes of tariff-free access to enter the UK. Free trade agreement negotiations are ongoing with both India and Mexico. 

Strong beet sugar performance for both Russia and Ukraine despite war

The increased sugar extraction rate of Russia’s beet sugar production continues to outperform last year, with 6.4 million tonnes produced by the end of January. An expected 6.8 million tonnes will be produced at the end of the campaign, compared with 6.5 million tonnes in 22/23. In 2024, Russia’s farmers are expected to sow the same acreage, as the moisture levels are ideal for a good crop. Russia continues to export to the Commonwealth of Independent States (CIS) region to reduce their dependency on imported Brazilian cane sugar.

Ukraine’s 23/24 beet harvest is also looking strong as areas under beet increased. Farmers are looking to expand on the 1.4 million tonnes produced in 22/23, as duty free sugar continues to be allowed into the EU. In 22/23, 400,00 tonnes were exported, while around 750,000 tonnes are expected to enter the EU in 23/24.

Cane sugar production rises in South America

South American countries are seeing some of the largest increases in cane sugar production for 23/24, estimated at 55 million tonnes. Argentina is set to increase production to 1.7 million tonnes, Brazil is estimated to increase to 45 million tonnes and Colombia to 2.2 million tonnes. After two years of La Niña bringing prolonged wet weather, resulting in disrupted harvests and lower sugar content, El Niño will bring better weather.

High sugar pricing leads to greater investment in Brazil’s sugar industry

A record cane crop, which began in April last year, is being realised, despite the area under cane being at its lowest for 12 years. Rain meant a slow start to the cane crush, and concerns over heavy rainfall accelerated the cane crush. The harvest ended in March, with total cane sugar production estimated at 45 million tonnes for 23/24, compared to the 38.7 million tonnes produced in 22/23.

Rain is needed to aid cane development for the 24/25 crop, as drier than normal conditions in December and January affected the soil’s moisture. Recent high global sugar pricing alongside reduced diesel and fertiliser prices have increased sugar mill profits. This has led to more investment in Brazil’s sugar industry, resulting in greater efficiencies in the production process and a record volume of sugar produced since November.

In December, January and February, bulk raw sugar left the ports on time and in full, surpassing all previous records, due to the dry weather. Ethanol production from sugarcane has more than doubled compared to this time last year, but global prices for crude oil have seen imported oil as a cheaper energy source. With domestic ethanol prices falling, sugar mills have increased the production of sugar as a sweetener to 51.4%.

Cane production down as Thailand struggles with lack of rainfall

In the 23/24 season, Thailand’s farmers have switched to growing alternative crops such as cassava, with the area under cane down by approximately 5%. Warmer temperatures during September and October dried out the soil, with no rainfall during this crucial cane development period. Although rain came later, it was too late. The cane harvest began in December, but sucrose yields have been significantly down, and the harvest ended in March, a month earlier than last year.

Estimates for cane sugar produced in 23/24 is only 9 million tonnes compared with 11 million tonnes in 22/23, despite a strong tail end to the crushing season. Available sugar for export is estimated at around 5 million tonnes.

India drastically reduces sugar exports while Pakistan recovers

The area under cane in India increased for the 23/24 cane crop. Dry weather reduced the development of the cane, but unseasonal rain improved the cane yield and sugar content just before the harvest began in October. However, a general lack of available labour saw the harvest extend until the end of March with a slight recovery in cane yields in Maharashtra and Karnataka.

With a cap of 2 million tonnes of sugar going towards ethanol production and an extended harvest period, India should be able to produce 35 million tonnes of cane sugar for 23/24, which is above domestic consumption at 28.5 million tonnes. This will force the world’s second largest sugar producer to continue to ban sugar exports. Since the 22/23 marketing year, India has reduced sugar exports by 45% to help domestic sugar stocks and the country will import sugar during 2024. India produced 32.8 million tonnes of cane sugar in 22/23, a reduction on the 39 million tonnes produced in 21/22. We are seeing significant reductions in the volume of sugar that is exportable for the world market.

In neighbouring Pakistan, the industry is recovering from high fertiliser prices and flood damage of the 22/23 crop. For 23/24 the government increased the support price to farmers by 33% for the cane harvest, which began in November. Cane sugar produced from the 23/24 harvest is estimated at 7.9 million tonnes, compared to 7.2 million tonnes in 22/23.

A mixed picture for Africa’s sugar industry

Egypt’s continued expansion in the sugar industry is likely to see the country produce 2.7 million tonnes in 23/24 compared with 2.5 million tonnes in 22/23, of which 1.7 million tonnes is beet sugar.

Last season’s lower beet prices saw farmers switch to growing other crops. Beet sugar is sown in August and harvested in March, so the shortfall in white sugar during the winter months saw Egypt receive 300,000 tonnes of raw sugar to refine into white sugar. The country faced extreme shortages with the government issuing rationing cards to reduce the trade of sugar on the black market.

South Africa is estimated to produce 2.1 million tonnes of cane sugar in 23/24 compared with 2 million tonnes in 22/23. The country is benefiting from a strong export demand in Asia due to decreased cane sugar output in the region. However, recent sugar mill closures, civil unrest, and flooded cane fields in 22/23 leaving 3 million tonnes of uncut cane in the fields, means that exports are unlikely to reach above 100,000 tonnes.

Malawi is experiencing low stocks in their local market with potential sugar shortages due to a drop in production output. Eswatini, Kenya, Morocco and Tanzania are all seeing smaller production estimates because of a drop in cane yields. Mauritius will see a slight increase in production, after exporting 80% of its raw and white sugars to Europe in 22/23.

Australia’s sugar yields and exports remain flat

Australia’s sugar exports are small on the world’s stage, but it does contribute 10% of the global sugar trade with exports to Asia and the Middle East, with the UK now a key export destination. Since 2018, the EU has been negotiating a trade deal but have only offered 20,000 tonnes per year. This is not commercially viable for Australia, as a single vessel would normally carry 40,000 tonnes of sugar.

Expansion of the industry remains constrained due to continued urban development and other competing crops. The 23/24 cane crush started in June last year and finished in late December, a month earlier than the previous year. The harvest produced an average yield with lower sugar content, a result of a reduced regrowth period and continuous rainfall during the harvest.

The latest reports indicate that Australia produced 4.3 million tonnes of cane sugar for the 23/24 harvest, which compares with 4.2 million tonnes in 22/23.

Small US stock surplus as hope continues for harvest recovery in Mexico

The USA’s estimate for total sugar production for 23/24 is 8.3 million tonnes. There is likely to be a small surplus stock in 2024. In North Dakota and Minnesota there was a lower acreage of beet sugar planted and record warm temperatures during the lifting campaign caused problems with spoiled beets, resulting in lower sucrose recovery. As consequence, beet sugar production is estimated to fall to 4.4 million tonnes in 23/24 compared with the 4.5 million tonnes produced in 22/23.

In the south, Florida and Louisiana are experiencing a fifth consecutive record cane crop. This will help offset lower cane production in Texas and lower beet sugar production in the north. The result will be 3.8 million tonnes of cane sugar production for 23/24.

The 23/24 Mexican cane harvest started in November. Crushing is down 12% on last year due to a reduced cane area of around 5%, with rain disrupting the beginning of the harvest. Sugar extraction is also down, as the cane has not benefitted from suitable weather for cane and sucrose development during the growing months.

The Mexican harvest will continue until June, so there is time for recovery. In 22/23 5.2 million tonnes was produced, down from 6.6 million tonnes in 21/22. An optimistic production forecast for 23/24 would be 4.9 million tonnes of sugar. This will see a continuation of Mexico’s reduction in export to the USA to around 666,000 tonnes from the 23/24 crop.

Growth in China’s cane sugar production and domestic sugar consumption

In the Xinjiang region the beet campaign ended in February, at increased production. Total beet sugar production for 23/24 is estimated at 1.14 million tonnes compared to 1 million tonnes in 22/23. The area under cane increased for the 23/24 season following government support for farming food crops. Last year’s earlier harvest enabled better cane development in Guangxi for the 23/24 cane harvest that began in December and will end at the beginning of April.

Despite reduced sugar extraction rates, cane sugar production is expected to rise to 8.8 million tonnes in 23/24, compared to 7.8 million tonnes in 22/23. Early indications are that China is expected to produce 9.94 million tonnes of sugar in 23/24 compared with 8.9 million tonnes in 22/23. China’s domestic sugar consumption continues to rise and is now estimated at 17 million tonnes in 2024. This leaves a sugar deficit of around 5.76 million tonnes, which will need to be balanced with imported sugar.

At Ragus, we continuously track and evaluate the factors that shape our industry. To learn more about our products, please contact our Customer Services Team. To see more sugar news and updates, continue browsing SUGARTALK and follow Ragus on LinkedIn.  

Ben Eastick

A board member and co-leader of the business, Ben is responsible for our marketing strategy and its execution by the agency team he leads and is the guardian of our corporate brand vision. He also manages key customers and distributors.

In 2005, he took on the role of globally sourcing our ‘speciality sugars’. With his background in laboratory product testing and following three decades of supplier visits, his expertise means we get high quality, consistent and reliable raw materials from ethical sources.

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