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Sugar: Supply and Demand Drivers

Sugar is sourced from either sugar beets or sugar cane. The beet crop is confined to northern latitudes while the cane crop is grown in tropical latitudes. Beets are grown and harvested in a traditional growing season while cane is grown, harvested and replanted on an ongoing cycle. The bulk of global sugar production is sourced from sugar cane. As an alternative to being processed into granular sugar, cane and beets can be processed into ethanol. Granular sugar is traded internationally in both raw and refined (white) form.

1) Key Trading Parameters:

Raw Sugar

Exchange Traded: International Commodity Exchange (ICE), ICE Futures US

Product Specification: Raw

Price Quote: US cents per pound

Futures Contact size: 112,000 pounds

Contract Months: March, May, Jul, Oct

Settlement: Physical Delivery

White Sugar

Exchange Traded: International Commodity Exchange (ICE), ICE Futures US

Product Specification: White

Price Quote: US dollars per metric ton

Futures Contact size: 50 metric tons

Contract Months: March, May, Aug, Oct, Dec

Settlement: Physical Delivery

2) Market Drivers

  1. Global Supply and Demand Dynamics: Brazil and India are the largest producers of sugar globally, followed by the European Union, China and Thailand. India, China, European Union and the US are the largest consumers of sugar.
  2. Food vs. Fuel: The primary processing stage for sugar cane is the same for both sugar and ethanol. Cane stalks are pressed for juice which can be used to produce either sugar or ethanol. The decision to produce sugar or ethanol is influenced by relative prices for each product and this variable has a significant impact on price movements.
  3. Highly Regulated: As a consumer staple and globally traded commodity, sugar has been subject to a myriad of government regulations in the form of import tariffs, export restrictions and subsidies, domestic price regulations and production incentives. Policies both promoting and restricting consumption and trading of biofuels have added to this complexity.
  4. Fixed Costs: Sugar requires significant investment to create a cane production system and processing system. Acreage shifts in sugar are less than in other crops where area can be converted more easily from one crop to another. As a result, sugar prices can be subject to prolonged bull and bear cycles as supply response is more limited.

3) Latest News and Analysis on Sugar

US Sugar Production Forecast Lowered, While Mexico Output Revised Upward

The USDA has revised its production forecasts for US sugar, decreasing estimates for both the 2023/24 and 2024/25 marketing years. Meanwhile, Mexico's sugar production for 2023/24 has been adjusted upwards, according to the latest report published by the USDA. The US sugar supply for the

Global Sugar Production Up, But Stocks and Exports Forecast to Decline

Global sugar production is expected to rise slightly in the 2023/24 marketing year, but stocks and exports are forecast to decline, according to the latest sugar report released by the USDA. The report projects global sugar production to reach 186 million metric tons (MT), a 2.5-million-ton increase from

Mexico Sugar Production Revised Upward, US Beet Sugar Output Trimmed

Mexico's sugar production for the 2023/24 marketing year has been revised upward, while US beet sugar production estimates have been trimmed, according to the World Agricultural Supply and Demand Estimates (WASDE) report released by the USDA last week. The report projects Mexico's sugar output to

Thailand Sugar Production Set to Rebound as Exports Surge

Thailand's sugar production is expected to rebound in the 2024/25 marketing year, driven by a recovery in sugarcane production and increased sucrose yields, according to a recent report by the USDA's Foreign Agricultural Service (FAS). FAS forecasts sugarcane production to reach around 96 million metric
Thailand Sugar Production Set to Rebound as Exports Surge

Brazil Sugar Production Hits Record High: Reuters

Brazil's sugarcane crop for the 2024/25 season is expected to decline slightly from the previous year's record high, while sugar production is projected to reach an all-time peak, according to a report by the Brazilian government agency Conab cited by Reuters. Conab forecasts the total

India's Sugar Consumption Heats Up Amidst Election Fever and Scorching Temperatures

India's sugar consumption is expected to reach record highs this year as a confluence of factors, including a blistering heat wave and ongoing elections, drive up demand, according to a report by the Economic Times. The report highlights the significant role of summer weather in boosting sugar consumption

Philippines Ample Sugar Stocks May Eliminate Import Need | Philstar

The Philippines may not import sugar in 2025 due to ample stocks from previous imports and steady production, according to the United States Department of Agriculture-Foreign Agricultural Service (USDA-FAS) in Manila, as reported by The Philippine Star. USDA-FAS Manila projects the country will produce 1.85 million metric tons of

US Sugar Supply on the Rise with Increased Imports

The U.S. sugar supply for 2023/24 is expected to increase, despite a decrease in domestic production, according to a recent report from the U.S Department of Agriculture. The report forecasts a rise in imports, particularly from sources other than Mexico, to compensate for the lower domestic output.

Mexico's Sugar Production Falls to 25-Year Low

Mexico's sugar industry is facing significant challenges, with production expected to hit a 25-year low in 2023/24, according to the USDA's April report on sugar and sweetners. This decline is attributed to a combination of unfavorable weather conditions, rising input costs, and reduced harvested area.

Asia Sugar Market Faces Supply Constraints and Shifting Import Demand in Early 2024

The Asian sugar market enters 2024 navigating challenges posed by reduced sugarcane output and evolving import demand dynamics, according to a report by S&P Global. The report highlights the impact of El Niño on sugarcane production in key Asian countries. Thailand's cane crush and sugar production
Asia Sugar Market Faces Supply Constraints and Shifting Import Demand in Early 2024