Global sugar market report May 2023

Since the last global sugar market report in October 2022, a host of challenges have affected world markets. From bank failures in both the United States and Europe, ongoing geo-political tensions between US and China, the war in Ukraine and a continuing rise in interest rates, there is a complex backdrop to international sugar supply.  

The London white sugar futures are currently at 27.4 c/lb (cents per pound): the highest for eleven and a half years. These bull market prices are the result of the downturn in sugar production of the world’s major sugar producing countries: Brazil, China, India, and Thailand. 

Global beet sugar production reached 37.2 mln tonnes from the 2022/23 campaign and global cane production resulted in 145.5 mln tonnes of sugar being produced from the 22/23 harvest. Global sugar production for 2022/23 reached 182.7 mln tonnes, the lowest for three years.  

The northern hemisphere cane crush for 22/23 is only now reaching its tail end, the southern hemisphere cane crush for 23/24 has just started and the beet sowing for the 23/24 campaign is in the ground. We expect the coming year will see increased production from Brazil, China, Europe, and Pakistan, despite the expected drop in production from Thailand.  

After two and a half years of a La Niña climate pattern, we are moving to an El Niño formation. Expected this summer, this would result in the Indian and Thai off-season being drier and the Brazilian harvest wetter. For the 2023/24 season, we estimate an increase in global beet sugar production to around 39 mln tonnes and an increase in global cane production to 152 mln tonnes, making total global sugar production 191 mln tonnes. 

Global consumption will continue to rise yet again to 189 mln tonnes in 2023/24 from 186 mln tonnes in 22/23. The world market will have a surplus of around 1 mln tonnes for 22/23, less than estimated back in October. The tightness in supply is keeping demand strong and prices high. 

Wet weather has delayed the beet sowing this spring, but the total area under beet will be slightly up with increased acreage in Poland, the EU’s third biggest producer. This will offset a 4.9% decrease in France, which is mainly due to the ban on the use of neonicotinoids seed treatment.  

After a poor beet campaign in Germany in 2022/23 due to a dry summer, we estimate a modest increase in beet sugar production in 23/24 after a delayed spring sowing. Overall, two factors impacted on European beet sugar production for the 2022/23 campaign: The continuous heatwave and drought in late summer, and the fact that many European countries started their campaigns early because of concerns over energy supplies during the winter. 

This resulted in European Union beet sugar production reaching 14.8 mln tonnes in 2022/23, down from the 17.0 mln tonnes produced in 21/22.  

Last October we estimated that British Sugar would produce 970,000 tonnes of beet sugar, despite the very dry growing conditions. By the end of the 2022/23 beet campaign they only produced 804,000 tonnes of beet sugar, compared to 1 mln tonnes in 21/22.  

The beet sowing for 2023 is now complete, with the area under beet increasing 13%, after a challenging wet spring. The farmers have agreed a £40 per tonne price for the 23/24 campaign, with Defra allowing 60% of the beet to be treated with neonicotinoid to protect the beets from aphid virus yellows. The plan is to start delivering the harvested beets early in September to compensate for the 22/23 shortage.  

With tight UK supply lines, British Sugar has taken the unprecedented move of not only buying imported sugar, but also buying from UK rival Tate & Lyle, who refine white sugar from imported raw cane sugar. We estimate that British Sugar could produce 950,000 tonnes for the 23/24 campaign. The first imports of Australian sugar for over forty years will become available in the UK from 31 May. This year 80,000 tonnes will be available duty-free in the UK market.    

With a higher area under beet, we expect Russia to continue its increased output for a third consecutive year as the world’s largest beet sugar producer. Poor extraction rates last year yielded 6.5 mln tonnes of beet sugar in 2022/23, down from the earlier estimates of 6.9 mln tonnes. Weather permitting, 6.6 mln tonnes of beet sugar should be produced from the 23/24 campaign.  

In Ukraine, the area of beet sown is expected to rise despite the ongoing war with Russia. In 2022/23 Ukraine produced 1.4 mln tonnes of sugar from beet. Only two out of the 32 factories are not operational, so if Ukraine can maintain yields for this year, production may increase to 1.6 mln tonnes. The European Union is allowing Ukrainian sugar exports to pass through their borders without tariff quotas or duties.  

Ukrainian domestic consumption has decreased since the start of the war, with people moving to other countries and Russia destroying food factories or occupying the territories the factories are in. 

Rains have significantly impacted on the start of cane crush for the 2023/24 season, which began in April. However, we estimate Brazil’s cane sugar production will rise to 42.3 mln tonnes in 23/24 if the weather improves during the crushing season. This is despite farmers switching to more profitable crops like corn and soyabeans, resulting in the country having its smallest area under cane for twelve years. 

If this tonnage is achieved, it will be Brazil’s second highest annual production after the record breaking 43.3 mln tonnes in 20/21. This compares with 22/23 reduced tonnage of 38.7 mln tonnes due to the slow start to the cane crush, and dry weather damaging canes.  

Realistically, only Brazil can alleviate the global tight supply lines, but the predicted El Niño weather patterns will likely bring wet weather and disruptions to the harvest, the cane yields and the transportation networks: much like the picture now, at the start to this season’s harvest. With gas prices being more competitive compared to ethanol, mills have diverted the cane mix to sugar production. 

Thailand’s cane harvest finished in April, with sugar production for 2022/23 reaching 11 mln tonnes as predicted in our last report in October, compared to 10 mln tonnes produced in 21/22. The increased sugar production is down to a record extraction rate, despite a lack of fertilisers producing thinner stalks and lower cane yields.  

For the 2023/24 season, farmers have switched to growing alternative crops such as cassava, with the area under cane down approximately 5%. Because the land is dry due to warmer temperatures, we forecast an even lower sugar production for the 23/24 crop, potentially around 10.9 mln tonnes. 

Estimates for India’s sugar production from the 2022/23 cane crop are below the decreased figure we estimated last October. The 35.6 mln tonnes we expect is much lower than the 39 mln tonnes produced in 21/22. Any further exports onto the global market this season seem unlikely, despite India having an export quota of 6 mln tonnes for the world market.  

Despite an increased area under cane, low rainfall during the growing season and too much rain just before the harvest began resulted in lower cane yields. For the 2023/24 crop, the area under cane has increased again. If the monsoon rainfall is average, we expect India to produce 36.4 mln tonnes of sugar. However, that figure only holds if there are no major increases in cane juice or molasses diverted into ethanol production. In 22/23 the equivalent of 4.5 mln tonnes of sugar was used for ethanol production. In 23/24, we expect that figure to be 3.78 mln tonnes.  

If an El Niño weather pattern develops, dry conditions would affect cane planting for the 24/25 crop. In neighbouring Pakistan, flood damage meant 2022/23 cane sugar production reduced to 7.2 mln tonnes compared to 8.6 mln tonnes in 21/22. The area under cane remains consistent with last season, but reduced fertilisers prices could push 23/24 sugar production to 7.8 mln tonnes. 

Poor yields due to rhizomania disease led to Egypt’s beet sugar production falling to 1.6 mln tonnes in 2022/23, although it is expected to rise again to 1.7 mln tonnes in 23/24 with the continued expansion of the industry. The 2022/23 cane sugar harvest is expected to finish in June, and with the area under cane the same as last season, we expect cane sugar production for 22/23 to be approximately 924,000 tonnes. With the government increasing the procurement price for 2023/24, we estimate that Egypt will produce 1 mln tonnes of cane sugar.  

The continent’s largest producer—South Africa—is currently experiencing several challenges. Cyclones and higher than usual rainfall damaged last season’s crop with 2 mln tonnes of cane sugar being produced in 22/23. Despite improved growing conditions and better yields forecast for 23/24, farmers have been planting other more profitable crops. Two mills have closed and a further two millers have an uncertain future. That reduced milling capacity could result in carry-over cane (cane not harvested) and a small increase in cane sugar production for the 23/24 crop, which we estimate to be 2.1 mln tonnes.  

Despite an increased area under cane and improved irrigation, Eswatini/Swaziland also suffered from unseasonal rainfall just before the cane harvest, making the fields inaccessible and delaying crushing. Eswatini still managed to produce 644,000 tonnes of cane sugar in 22/23 and we estimate a further increase to 675,000 tonnes in 23/24. 

With Australia exporting 80% of its cane sugar, the high global market prices have halted the five years of decline in planted area for Australia’s sugarcane. After three years of La Niña conditions, a return to El Niño weather patterns will favour the harvesting of the 2023/24 crop, which starts this month.  

Last year’s harvesting continued until mid-January 2023, which has reduced the re-growth period for the 23/24 crop, although we expect the sugar content to recover. As a result, we estimate total cane sugar produced in 2023/24 to increase to 4.4 mln tonnes from the 4.2 mln tonnes produced in 22/23. 

The acreage of beet sown in the USA for this campaign is down 4.2%, as farmers look to grow more profitable crops like corn, soyabeans and wheat. This could result in the lowest area under beet since 2008, reducing sugar beet production to 4.4 mln tonnes from the 4.5 mln tonnes produced in 22/23.  

In the south, Florida and Louisiana experienced record cane yields and the biggest ever cane sugar production figure of 3.7 mln tonnes for 2022/23, despite a slight decline in the Texas region. High cane prices will encourage farmers to continue growing cane, so we estimate that this season’s crop will produce 3.7 mln tonnes for 23/24.  

The 2022/23 Mexican cane harvest is due to finish by the end of June, a month earlier than last season. We estimate cane sugar production for 22/23 will fall to 5.7 mln tonnes from 6.6 mln tonnes in 21/22. The drought throughout the cane growing season coupled with a lack of fertilisers has resulted in the lowest cane yield since the 1960s. We forecast that improved weather conditions and available fertiliser will see the 23/24 cane sugar production recover to around 6.3 mln tonnes, with exports to the United States at around 1.1 mln tonnes. 

Despite the long summer heatwave and a drought, an increased area under beet increased to production to 1.1 mln tonnes in 2022/23, although that figure remains well below the five-year average. Depending on the weather, we estimate an increase to 1.2 mln tonnes in 23/24.  

The 2022/23 cane harvest finished in April, with crushing down around 18%. The area under cane will increase slightly for this season because the early harvest last season allowed better cane development. If the weather remains less dry, China could produce 9.4 mln tonnes of cane sugar in 23/24, compared to 8.6 mln tonnes in 22/23. Total sugar production for 2023/24 is likely reach 10.6 mln tonnes, compared to 9.7 mln tonnes produced in 21/22.   

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