Sugar prices hit a 10-year high! Find out what’s causing the surge.
If you are a sweet lover, there is bad news for you. The price of the most commonly used sweetener – Raw Sugar, has reached a new 11-year high. Not just that, white sugar prices have also been on a massive rally and hit a 10-year high last month.
After experiencing a sudden surge in sugar prices, everyone has been asking: After all, what’s driving this sudden surge in sugar prices, and what does the future hold for this sweet commodity?
Let’s find out.
After hitting a new high that we haven’t seen in over a decade, sugar prices have become sweeter lately. And the reason behind this massive bullish rally is low crop production because of adverse weather conditions in major crop-producing countries like India, Pakistan and Thailand. Moreover, Europe is also caught up in the same cycle, and the crop output there is also expected to decline.
If you are wondering how much of India’s sugar production is affected, here is the data.
According to the Indian Sugar Mills Association (ISMA), in 2022-2023, the crop estimate declined from 35 million tonnes last year to 32.8 million tonnes this year. This is the first decline in sugar production in the last few decades. Moreover, because of the production decline, out of 532 Indian mills in the crushing business, nearly 75% of sugar mills wrapped up their operations in April, two months earlier than usual.
However, there was still a sign of hope, as Brazil was expecting a higher sugarcane output this season. Still, according to CNBC TV18, the country is most likely to use the produce towards ethanol production.
All of this, in unison, has led to lower sugar exports globally, which has created a tight supply chain while demand remained the same. Not just that, because of lower output, India’s ambition of ethanol-blending might also take a hit.
According to CNBC TV18, sugar consumption in India is expected to be higher this summer, with demand from households, bakeries, and ice cream makers expected to be strong.
With sugar prices already running high, market experts believe we could see even higher sugar prices by the end of summer and the beginning of winter.
It seems the sugar rollercoaster ride is far from over!
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
*The article is for information only. This is not investment advice.