Sugar prices have surged recently, hitting an 11-year high of 24 cents per pound, driven by increased demand and worsening weather conditions. Analysts predict that prices could rise further due to several factors impacting supply.
According to Girish Chhimwal, a sugar analyst at S&P, the current market conditions are quite bullish, with weather risks affecting major sugar producers.
This uptick in sugar prices is expected to be reflected in higher costs for candy and sugar-based beverages, as noted by John Stansfield, a senior analyst at DNEXT.
Global food prices are rising broadly, with increased costs for ingredients like milk and cocoa powder, as well as for energy and labor.
Weather-related disruptions in key sugar-producing regions and OPEC’s oil cuts are driving global sugar prices upward.In particular, the Asian cane crushing season is winding down, and key sugar-producing countries such as India, Thailand, China, and Pakistan are experiencing downward revisions in their crop forecasts.
India, the world’s second-largest sugar producer, recently reduced its sugar production estimates by nearly 3% due to unseasonal rainfall.
Moreover, Europe is facing a poor beet crop due to drought and reduced acreage. While Brazil’s sugarcane harvest could offer some relief, its start has been slowed by heavy rains.
The possibility of El Niño, which the National Oceanic and Atmospheric Administration predicts has a 62% chance of occurring, could further destabilize the market. Additionally, OPEC’s recent oil output cuts are pushing more sugarcane towards ethanol production, keeping sugar prices high.
Countries with high food insecurity, especially in North and Sub-Saharan Africa, will be most affected by these rising sugar prices.