Sugar prices up more than 40%, with further rises expected

Data from The Smart Cube has shown the extent of sugar price rises over the past year, with the insights business predicting that prices will continue to increase between now and the end of 2023.

The trend is the result of declining production in India, Thailand and China, in addition to a smaller than expected beet harvest across the European Union. The low beet harvest came as a result of a cold and wet spring in France, Germany and Poland.

In May 2023, the Indian Government banned sugar exports as it sought to bolster domestic availability. India is the second largest producer of sugar in the world.

Associate specialist at The Smart Cube, Nidhi Jain, explained that adverse weather conditions had proved a major obstacle to global sugar supplies.

“The intensity of the dry season that El Niño is set to cause this year could result in a 10 to 15% reduction in sugarcane yield globally​,” Jain warned.

“India, Thailand, and China, all of which are among the top five producers of sugar globally, are forecasted to witness a decline in production in H2 2023 as a result. Looking specifically at Thailand, sugarcane output is expected to decline 21% in 2023–2024 as a result of the weather phenomenon​.”

Sugar supply not meeting demand

While poor weather has caused supply to fall below usual levels, demand for sugar around the world has continued to grow.

“The impact of this is already being felt across a number of different industries​,” Jain said. “For example, the wider confectionery industry is under increasing amounts of pressure to tackle the crisis. Small players, such as bakeries and hotels, who depend on sugar as a crucial ingredient for their products, are reportedly suffering diminishing profit margins as they battle to absorb the increasing prices without passing them on to their clients, unlike large players​.”

In other news, the cancellation of the Black Sea grain deal by Russia could trigger increased volatility in global food prices​​.