Sugar Prices Expected to Surge by 20% in 2024
Global Sugar Prices Set to Rise
Raw sugar prices are anticipated to experience a significant surge in 2024, with an estimated annual gain of nearly 20%. This projection comes as the global market is poised to transition into a deficit in the upcoming season, according to a Reuters poll of 12 traders and analysts.
Factors Driving the Price Increase
The expected sugar price hike will likely see the commodity closing the year at 24.5 cents per lb, marking a 5% increase from the previous year. This surge could reach as high as 19% above levels recorded at the end of the preceding year. Output in Centre-South Brazil, the leading production region, is expected to remain robust despite a slight drop in the cane crop. This is due to mills prioritizing sugar production over biofuel ethanol.
Insights Into Production Trends
While production is forecasted to remain strong in Centre-South Brazil, the second-largest producer, India, is expected to see a decline in output. The sugar market is under strain, with concerns raised about over-reliance on a single source of supply. Without growth in India, the global sugar production for 2024/25 is likely to decrease, according to trader and supply chain services company Czarnikow.
Global Supply and Demand Dynamics
The poll’s median estimate indicates a global sugar surplus of 500,000 metric tons for the current 2023/24 season, which is expected to shift to a deficit of 700,000 tons in 2024/25. Top producer Brazil’s Centre-South sugar output is projected at 42.1 million tons in the upcoming 2024/25 season, with a potential small increase despite a decrease in the cane crop.
Market Trends and Projections
Brazilian mills are expected to allocate more cane to sugar production in place of cane-based biofuel ethanol, resulting in a production mix favoring the sweetener. Analysts also predict that white sugar prices will end the year at $700 per metric ton, representing a 6% increase from the previous year and a potential 17% rise from 2023 levels.
India’s Role in Sugar Production
India, the second-largest sugar grower, is forecasted to produce 31.6 million tons of sugar in the current 2023/24 season, with estimates showing a decrease to 29 million tons in the upcoming 2024/25 season.
